PRAYERS

Railways: East Coast Main Line
 - Question

Lord Beith: To ask Her Majesty’s Government what arrangements they propose for the continuation of train services on the East Coast mainline.

Baroness Sugg: My Lords, the Government are currently reviewing two options for the continuation of services on the east coast. Our priority is the continued running of the line for passengers. The first option is to allow Stagecoach to continue operating the service under a very strictly designed short-term contract. The second is for the franchise to be directly operated by the Department for Transport through an operator of last resort. We will choose the best option that protects the interests of passengers and offers value for money.

Lord Beith: My Lords, the fact that we are on the third failed franchise is down to incompetent franchising, fanciful overbidding by operating companies and a failure of the publicly owned Network Rail to deliver the track and overhead improvements on which the bids were based. What is the plan now? Are there only two options or more than that—a rerun franchise competition, a new type of franchise combining track and train operation, a nationalised operator or a sweetheart deal for Stagecoach/Virgin to run the trains without taking the risks? When will we know?

Baroness Sugg: My Lords, we expect to make an announcement on the two options in the coming months. From 2020 there will be a new east coast partnership as part of our reform of track and train to ensure that they work together better to deliver the services that passengers need.

Lord Cormack: My Lords, my noble friend may know that Lincoln, which has an appalling service from London, has been faithfully promised five direct trains a day as from 2019. Can she give me a confident assurance that that promise will be kept?

Baroness Sugg: My Lords, we are in discussions with Stagecoach to ensure that the needs of passengers and taxpayers will be met in the short term while laying the foundations for the introduction of the east coast partnership in 2020. We expect to provide additional services between Lincoln and Harrogate, Bradford and London from May next year.

Lord Beecham: My Lords, as a reluctant passenger on Virgin trains I refer to my interests—doing so, in this case, is almost as slow as the train service. Will the Minister look at the laughably misnamed  TransPennine Express and the service it purports to offer between the north-east and the north-west. Will she also look at the need to radically improve the rail connection between the north-east and the north-west and not simply rely on some future date when maybe a new national train line will surface?

Baroness Sugg: My Lords, I will certainly look at that in more detail. We are working closely with Transport for the North to understand the priorities of the north and where best to invest. We are committed to improving journeys on the trans-Pennine route. We are bringing in state-of-the-art trains, longer carriages and more frequent services to give passengers the services they want. We are going further. We plan to spend around £3 billion to upgrade the key route between Manchester, Leeds and York to give passengers faster and more reliable journeys.

Lord Palmer: My Lords, does the Minister agree that reaching yet another impasse is very worrying for all of the staff who work on the east coast main line? They have now had about half a dozen different employers, and it is very demoralising for them.

Baroness Sugg: My Lords, of course I understand the position of the staff. It is important that they have confidence in their jobs, and that is why we are looking through two options for the continuation of services up to 2020, and why, from 2020, we will be introducing the new public/private partnership.

Lord Shutt of Greetland: My Lords, we are promised that on 20 May we will have the biggest timetable change in 10 or 15 years—this is a mere 67 days hence. I looked at the east coast website this morning, and there is no detail about this timetable. Is the change dependent on whoever gets the franchise, or will we have the timetable that Virgin Trains may have speculated it could run from 20 May?

Baroness Sugg: My Lords, the timetable is not dependent on the decision made between the two options. I understand there has been a delay to the timetable, for which I apologise. The operator and Network Rail are working through the options and are looking to publish it as soon as they possibly can.

Lord Popat: My Lords, will the Minister please tell us what will happen to the premium payments from future operators of the east coast franchise?

Baroness Sugg: My Lords, whichever option for running the franchise to 2020 is chosen, the Government will continue to receive premium payments. As I have said, from 2020 there will be a new public/private partnership on the east coast. That will be subject to a competitive process and will include appropriate contributions paid by the private partner to the Government. The Government will continue to receive premium payments but I am afraid I am not able to give an exact figure at this time. It is important to reiterate that this is a successful and profitable line, and it will continue to deliver revenue to the Government.

Lord Snape: My Lords, does the Minister accept any responsibility for this latest farce on the east coast main line? Does she not think that accepting  an outrageous bid, which suggested an 8% growth in passengers every year of the franchise, was ridiculous to start with? Bearing in mind that the Treasury has frozen fuel duty for coming up for eight years, while insisting that rail fares go up in accordance with the RPI, does the Minister not feel that the Government’s so-called green policy is rather shot to pieces?

Baroness Sugg: My Lords, of course there were some errors in the granting of this franchise, and the suggestion concerning passenger numbers was indeed incorrect. We have learned some lessons and introduced new measures to deter overbidding, and have improved our financial modelling and stress testing. With this added testing, the department can forecast bids which are likely to default and exclude them in the future. On fares, the Secretary of State for Transport has underlined our aspiration to move from RPI to CPI but we must manage this transition properly and take into account staff costs, which are a third of operating costs.

Baroness McIntosh of Pickering: Will the Minister join me in congratulating the east coast operator on taking brand new trains into service in 2019? These are built locally to a very high specification, and will reduce the journey time to London considerably.

Baroness Sugg: My Lords, I certainly join my noble friend in congratulating east coast on this, which again will not be affected by the decision on who is to run the franchise. As my noble friend has said, the Azuma trains are due to start being introduced on the east coast network from the end of this year, and I am sure that passengers will enjoy the benefits.

Lord Foulkes of Cumnock: My Lords, I too am one of the passengers who the Minister referred to in her first Answer. I have travelled on this line when it was run by GNER, now by Virgin, and in between when it was publicly owned. That period produced by far the best service. Would it not be much quicker, cheaper and better for the Government to decide now that the service should continue as a publicly owned, efficient railway?

Baroness Sugg: My Lords, I am afraid that I have to disagree with the noble Lord. We are currently going through the process of analysing which is the best option for passengers going forward. On his point about the service being better under DOR, I am afraid that we received 20% more income when it was run as a franchise, with higher satisfaction rates.

Apprenticeships: Levy
 - Question

Lord Blunkett: To ask Her Majesty’s Government whether they intend to make adjustments to the Apprenticeship Levy to facilitate the improved working of that programme and to reverse the fall in apprenticeship starts, including the redistribution and effective use of any current underspend.

Lord Blunkett: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I draw attention to my interest as set out in the register.

Viscount Younger of Leckie: My Lords, we continue to monitor apprenticeships’ market performance, including levels of starts and spend. We have made radical reforms to the way we develop, deliver and fund high-quality apprenticeships, and further major changes have the potential to be destabilising. However, we are prepared to make adjustments when and where they are required in order to deliver our ambitions and support quality apprenticeships.

Lord Blunkett: I thank the noble Viscount for that Answer, but I am genuinely at a loss as to why the Government are so resistant to the calls being made by those who are committed to the apprenticeship levy and to quality apprenticeships for changes that would reverse the 26% drop in the last quarter in starting apprenticeships and utilise the underspend so that small and medium-sized companies and associated colleges could undertake the necessary work, perhaps in the future top-slicing sufficient funds to reach out beyond the larger enterprises, thereby helping both individuals and our economy.

Viscount Younger of Leckie: I hope that I can reassure the noble Lord that the Government have awarded £490 million to providers across the country to deliver apprenticeship training for smaller businesses from January 2018 to April 2019. Today, we have announced that in April we will be making available an additional £80 million for starts with SMEs which will support up to an extra 40,000 apprenticeships. Also, in terms of flexibility, from April levy-paying employers will be able to transfer up to 10% of the annual value of the funds entering their digital accounts to other employers, including SMEs.

Baroness Redfern: My Lords, the success of SMEs is critical to the UK economy, as is a thriving apprenticeship system. For our SMEs, a central fund enables the Government to fund 90% of the training programme, which the Minister has alluded to, leaving only 10% of the costs to be covered by businesses themselves. Unfortunately, there is still a poor level of understanding of the levy and how it can be spent among employers. Does the Minister agree that, although there has been a drop in apprenticeship starts, calling the new system a failure is not only a huge simplification but writes off the new8 apprenticeship system before it has even had a chance to embed? What apprenticeships need right now is positivity and action.

Viscount Younger of Leckie: My noble friend is right to say that we must not lose sight of what we are actually doing here, which is why we have introduced these reforms. It is the largest government reform of apprenticeships that has ever been made. The key point here is that we are putting quality at the heart of our reforms. We need to look at how the system is operating and provide some flexibility in the system, which is the gist of the original Question asked by the noble Lord, Lord Blunkett.

Baroness Garden of Frognal: My Lords, a recent report showed that the UK skills shortage is leading to an estimated £7.3 billion annual loss in sales to SMEs, equivalent to approximately 250,000 jobs. The Minister has already mentioned some help to be given to SMEs, but what is the apprenticeship levy doing to help SMEs meet the acute skills shortage?

Viscount Younger of Leckie: I have already mentioned the transfer arrangements. Up to 10% can be transferred by employers to SMEs to help them take on apprentices. In addition, we have a marketing programme under way—I highlight the “A” pin on my lapel in support of National Apprenticeship Week which took place last week, and there was a lot going on on the radio also. I think that we will find that the fall we experienced last year will change and that employers will be taking up more apprenticeships.

Baroness Butler-Sloss: My Lords, are the Government checking the effectiveness of individual apprenticeships to make sure that they are actually working properly for the benefit of the apprentice?

Viscount Younger of Leckie: Absolutely, and I can reassure the noble and learned Baroness that the Institute for Apprenticeships is responsible for quality and standards. It is the institute’s sole job to work closely with employers to ensure that the quality of each apprenticeship is high, which can take some time, and that the apprenticeship itself is what employers want, thus helping to increase skill levels in this country. That is our aim.

Lord Knight of Weymouth: My Lords, there has been a 30% year-on-year fall in apprenticeship starts by under-19s. That should be no surprise because, despite this being a great applied qualification, the pipeline is being strangled by the EBacc squeezing out applied learning from the curriculum. STEM is becoming S and M in schools, as technology and engineering are being taken out, leaving only science and maths. When are our schools policy and our skills policy going to align?

Viscount Younger of Leckie: I have mentioned to the House before that we have a National Careers Service up and running. It is essential in giving proper careers advice that employers in particular can go into schools and address, and hopefully garner, the interest of pupils. We are trying to address the skills shortages. STEM skills and occupational sectors, including the digital side, are well represented in our move from frameworks to greater standards and to increasing the skills level in our country.

Lord Forsyth of Drumlean: My Lords, does my noble friend know that the Economic Affairs Committee has been looking at this issue for almost the last year? We have had employers openly admit that they are using the levy to fund training that they would have done anyway. Is it appropriate that the apprenticeship levy should be used to fund people doing MBAs at business schools and so on? Surely the resources should be concentrated on level 3, and in particular on young people, to give them the skills that they need in the workforce.

Viscount Younger of Leckie: My noble friend is absolutely right. I had not heard about this, and I will certainly follow up on the points that he has raised. The whole point of the apprenticeship scheme is that it is employer driven; it is what employers will need. The standards and quality are set by the Institute for Apprenticeships. We believe it is working well, but I will look into my noble friend’s points.

Lord Watson of Invergowrie: My Lords, the noble Viscount the Minister should be aware that young people from low-income families are underrepresented in the apprenticeship programme. Some 13% of school children received free school meals last year; only 10% of young people starting apprenticeships had been on free school meals. One reason for that is that the Government still do not classify apprenticeships as approved education or training, with the result that the families of young apprentices lose the right to claim child benefit and tax credits. Last month at Oral Questions, I highlighted this structural barrier to the noble Viscount and asked him to speak to ministerial colleagues in the Department for Work and Pensions to try to make it more attractive for young apprenticeships to start. Has he done that, and if not why not?

Viscount Younger of Leckie: I can reassure the noble Lord that I have indeed done that. If he has not received a reply, and I am sure he should have, I will follow up immediately and make sure of that. Yes, it is true that some apprenticeships are on the minimum and I have no doubt that is a bit of a struggle. Having said that, many employers are paying more than the average, which is £6.70 an hour, rather than the £3.50 an hour that is now going up to £3.70.

Child Sexual Exploitation: Grooming Gangs
 - Question

Lord Pearson of Rannoch: To ask Her Majesty’s Government what assessment they have made of the national scale of the “grooming gang scandal”, including sexual exploitation of non-Muslim children by Muslim men, as emerged recently in Rotherham, Rochdale, Oxford and elsewhere; and what steps they are taking to enable the prosecution of those in the police and local authorities who have failed to prevent it.

Lord Young of Cookham: My Lords, the government-funded Centre of Expertise on Child Sexual Abuse is working to build a more informed picture of the scale of these crimes, and preventing them is a priority for the Government. The Independent Office for Police Conduct is currently conducting investigations into 33 police officers of varying ranks for potential criminal offences and breaches of the standards of professional behaviour, linked to the Rotherham case.

Lord Pearson of Rannoch: My Lords, I fear that reply is shamefully inadequate, because these girls are usually raped several times a day. If we accept the views of our lead police officer for child protection, of  Rotherham’s MP and of the recent Jay and Quilliam reports, we are looking at millions of rapes of white and Sikh girls by Muslim men, only 222 of whom have been convicted since 2005. Will the Government ask our Muslim leaders whether the perpetrators can claim that their behaviour is sanctioned in the Koran, and to issue a fatwa against it? Secondly, will the Government encourage a national debate about the various interpretations of Islam? Can we talk about Islam without being accused of hate crime?

Lord Young of Cookham: My Lords, child sexual exploitation is a vile crime and it is not exclusive to any one community, culture, race or religion. Political or cultural sensitivities should not get in the way of tracking down offenders and preventing future abuse. I say to noble Lords that we should be careful about our language in this matter, not least because I am about to repeat a Statement on inflammatory letters inciting a “punish a Muslim” day on 3 April. We need to be careful about how we approach this.
There is nothing in the Koran that encourages the sort of activity the noble Lord has referred to. In any case, the Koran would be trumped by the law of the land. Islam, like all world religions, does not support, advocate or condone child sexual exploitation. Indeed, respect for women is inherent in its faith. As my noble friend Lord Ahmad of Wimbledon has just told me, one of Islam’s phrases is, “Paradise lies at the feet of the mother”.
As for encouraging a debate on Islam, the Government are supporting an initiative by British-based Islamic leaders of all denominations to dispel the poisonous interpretations of Islam peddled by al-Qaeda and Daesh. We are taking a number of other initiatives to minimise the exposure of children to sexual abuse from whatever source.

Lord Maginnis of Drumglass: My Lords, I believe many people will be grateful to the Minister for clarifying that point, but is there not a contradiction in our own society, where we fail? I ask about a questionnaire sent out by Brighton and Hove City Council, asking children as young as six or seven, or their parents, for their gender perception. If we are allowing this type of information to be collected, for what purpose? It is to condition people as they grow up. Will the Minister look at our so-called liberalism, which enables this to happen and prevents the police getting on with their duties?

Lord Young of Cookham: My Lords, that goes slightly wider than the specific Question. I am aware of the debate taking place on transgender issues and the whole debate about at what age, if at all, children should be allowed to express their own sexual preference. This is not a subject on which I am an expert. I am very cautious about entering into it, but I will certainly draw what the noble Lord has just said to the attention of the relevant Ministers at the DfE.

Bishop of Oxford: My Lords, I am enormously grateful for the Minister’s Answer to the Question. I had the great privilege to be the Bishop of Sheffield for seven years during the child sexual  exploitation scandal in Rotherham and I am now the Bishop of Oxford. I spent a great deal of time in Rotherham following Professor Jay’s report and registered the shock across all sections of the community, including, of course, the Muslim community there, who were as deeply appalled by what had happened as the rest of the community. I vividly remember visiting some parents at a mosque in Rotherham and hearing how their children were insulted by the rest of the community in words I will not repeat in this House. Will the Minister affirm the condemnation with which these scandals are greeted across the Muslim communities in each of these towns and cities?

Lord Young of Cookham: There is only one word I can say to the right reverend Prelate: amen.

Lord McConnell of Glenscorrodale: My Lords, the experience of these young girls is not to be used to encourage religious intolerance, but it is still extremely serious. Yet again this week there have been calls for  a proper investigation into what happened in Telford from the local MP, a Conservative, and from Sarah Champion, who has of course championed the victims in other parts of northern England. Why is an  investigation not to be launched into Telford? This seems an extreme case of these extreme violent acts against young girls.

Lord Young of Cookham: I have read the reports of what happened in Telford—disgraceful cases that took place, I think, between 2007 and 2009. The case called Operation Chalice concluded in 2012 with a number of convictions. Since then I understand that both the police and children’s services have improved the way they operate. However, the option is open in this case for the Independent Inquiry into Child Sexual Abuse, chaired by Alexis Jay, to look at what happened in Telford and at the institutional responses to the child sexual exploitation that took place in that borough.

Public Services: Corporate Governance of Businesses
 - Question

Lord Haskel: To ask Her Majesty’s Government what steps they are taking to ensure a high standard of corporate governance at businesses that provide essential public services.

Lord Henley: My Lords, the Government’s corporate governance reform package will strengthen the United Kingdom’s corporate governance framework. Secondary legislation to be brought forward will require reporting on how company directors take their employee, supplier, customer and other stakeholder interests into account when carrying out their duties. It will also require quoted companies to publish and explain the ratio of their CEOs’ pay to the average of their United Kingdom employees.

Lord Haskel: My Lords, I hear what the Minister says but this is the second Question we have had this afternoon about public services. Does this not indicate that the system of fines and regulation is just not working? Will the Government introduce a new purpose-driven classification to be adopted by companies which are privately owned but publicly guaranteed, because we have to ensure continuity of their essential public services? It must be a classification that ensures a standard of behaviour that is responsive to the public and ensures that company policy and company metrics are aligned to the public interest and not just to shareholder value.

Lord Henley: My Lords, we have always made it quite clear that the importance of public services will come first. In terms of the affair of Carillion, which I think the noble Lord was alluding to without mentioning its name, my right honourable friend the Secretary of State made the situation clear in his initial responses. We have also made it clear that we need to see some degree of reform of corporate governance. That is why we brought forward that reform package and why the Financial Reporting Council has been consulting on its revisions to the code; when those come forward we will take that on further.

Lord Naseby: Is my noble friend aware that the current Lord Mayor of London has launched a campaign to restore trust in corporate governance and businesses throughout the United Kingdom? In that context, will he join the Lord Mayor of London and extend it beyond that franchise to possibly involve the Institute of Directors, the CBI, the TUC and trade bodies throughout the United Kingdom? As I am sure my noble friend is aware, there is a problem with public trust in the corporate world. Will he make sure that Her Majesty’s Government are absolutely in the vanguard of ensuring that that trust is restored?

Lord Henley: I am grateful to my noble friend for that response and I am aware of the Lord Mayor’s campaign. In fact, I was present—if I remember the precise event—at the launch of that campaign by the Lord Mayor. My right honourable friend the Prime Minister has also always made her views clear about the importance of corporate governance and reforms thereof. That is why we have brought forward this package and why, as I said, the Financial Reporting Council is consulting on it.

Lord Fox: My Lords, the role of the shareholder is very important in maintaining corporate governance, but increasingly the share registers of Britain’s companies are dominated by passive shareholders who do not have the capacity to oversee the corporate governance of the companies they own. Will the Minister explain who, in the absence of the shareholder, is the prime overseer of the board to maintain corporate governance?

Lord Henley: My Lords, as I said, the code and its revisions will be important, but it is also important that shareholders play their part in this process. We have considered that and it is why we have already brought forward certain reforms to increase shareholders’ knowledge. For example, shareholders can now see when companies have significant shareholder opposition  to directors’ pay. The Investment Association’s public register was launched in December and a number of investors—that is, shareholders—are already using this information as a tool to inform their voting in the upcoming reporting season. If we can improve shareholders’ knowledge, that will improve what they can do in controlling their companies.

Lord Watts: My Lords, would it not be a good idea to have representatives from the workforce on these boards to break up the old boys’ network that exists on a lot of boards? That way we would get some proper public accountability.

Lord Henley: My Lords, we think it is very important that the voice of those working for companies should be heard on the board. In the Corporate Governance Reform Green Paper we made it clear that companies should have flexibility to choose how best to engage with their employees, and there are a number of different ways they can do that. They can have an independent director who represents employee views, an employee advisory council or a director directly from the workforce. There are a number of options. It is certainly something that should be looked at.

Lord Stevenson of Balmacara: Does the Minister agree that one of the reasons we are now experiencing a bit of a run of scandals on outsourced public services is the lack of information available to public authorities which have to control them? Will the corporate governance changes which the Minister responded to give the Financial Reporting Council greater powers to regulate companies and to take action before things go badly wrong? It asked for those powers after the BHS collapse two years ago. When will we see the results of the lessons learned exercise on Carillion and the actions required by government, according to the Secretary of State, to strengthen,
“the oversight … of the public sector in terms of contractors”?—[Official Report, Commons, 30/1/18; col. 657.]

Lord Henley: The noble Lord is right to draw attention to the role of the Financial Reporting Council. We believe it has a range of powers that allow it to sanction, for example, individual auditors and accountants and to audit firms. In implementing our reforms, we certainly want to give further consideration to whether the FRC has the appropriate powers, resources and status to operate effectively.

Unpaid Work Experience (Prohibition) Bill [HL]
 - Order of Commitment Discharged

Moved by Lord Holmes of Richmond
That the order of commitment be discharged.

Lord Holmes of Richmond: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.
Motion agreed.

Supply and Appropriation (Anticipation and Adjustments) Bill
 - Second Reading (and remaining stages)

Moved by Lord Bates
That the Bill be now read a second time.
Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Secure Tenancies (Victims of Domestic Abuse) Bill [HL]
 - Third Reading

Motion

Moved by Lord Bourne of Aberystwyth
That the Bill do now pass.

Baroness Lister of Burtersett: My Lords, as someone who has been heavily involved in this Bill, I should like to say a few words of thanks. I thank the Bill team and the members of the noble Lord’s private office, who have been unfailingly helpful throughout the process. I suspect that they will not be too unhappy not to be seeing my emails in their inboxes any more.
I thank noble Lords around the House who have been so supportive, particularly my noble friend Lord Kennedy, but also the noble Baroness, Lady Hamwee, and the noble Lord, Lord Shipley. I thank too the noble Baroness, Lady Evans of Bowes Park, whose assurances during the passage of the Housing and Planning Act eventually led to this Bill. She probably had a hand in this Bill seeing the light of day. Last but not least, I thank the Minister and, at the risk of torpedoing his ministerial career, emphasise how he has been a model of an open and engaged Minister committed to making this Bill the best that it can be.
I give the final word to Women’s Aid, which has been briefing us so well at every stage of the Bill. Straight after Report, Women’s Aid emailed me to thank noble Lords for the amendments made then, saying that these had really improved the Bill and ensured that this legislation can work effectively for survivors whose housing security is at risk from an abusive relationship. Thank you. I hope that we can maintain as constructive a relationship when it comes to debating the forthcoming domestic abuse Bill.

Lord Kennedy of Southwark: Before the noble Lord winds up, I should like to pay tribute to my noble friend Lady Lister of Burtersett for her hard work and determination in getting this Bill here today. I thank the noble Lord, Lord Shipley, and others for their work. I also thank the noble Lord, Lord Bourne of Aberystwyth. I always enjoy our exchanges, here and outside the Chamber. He is a very good man who is sincere in what he does and I value our conversations about his work. He played a big role in getting this Bill in. We thank him very much as well.

Lord Shipley: My Lords, from these Benches, I add our thanks to the Minister for being so helpful in the passage of the Bill. It is a better Bill because of the work that was undertaken both in this Chamber and outside it. I thank the Minister for that. The House should pay tribute to the noble Baroness, Lady Lister of Burtersett, for all her hard work in explaining the background to this and thank too those advising her. We should also pay tribute to my noble friend Lady Hamwee for her hard work in pressing on this Bill.
As the Minister knows, it is one thing to enact a Bill. It is another for it to be implemented smoothly. The Minister has paid close attention to the need for adequate training by local housing authorities. He has also paid close attention to the issue that was raised at Report by the noble Lord, Lord Kennedy of Southwark, in relation to GPs charging victims of domestic abuse for the medical evidence that they need to secure a further tenancy. I am hopeful that that matter will be resolved in guidance.
Finally, to recall Second Reading and Committee, this Bill concerns only the public sector. It does not concern housing associations, which are now in the private sector. I hope that the Minister will ensure that housing associations follow the good practice that is now about to occur with the public housing stock.

Lord Bourne of Aberystwyth: My Lords, I thank very much the noble Lords who have spoken: the noble Baroness, Lady Lister of Burtersett, and the noble Lords, Lord Kennedy and Lord Shipley. I also thank the members of the Bill team. Often the civil servants do not get their due accolades, but they deserve to. Parwez Samnakay, Frances Walker, Jane Worthington, Jane Everton, Lizzie Clifford and, from my own team, Ed Clark have all worked incredibly hard, engaging with Peers, making things happen and working long hours. I am very grateful.
I pay tribute to the noble Baroness, Lady Lister, whose work this Bill largely is. It was her initiative to raise this with my noble friend Lady Evans of Bowes Park. Certainly my leader—the boss—deserves credit for making sure that this happened but it was the noble Baroness, Lady Lister, who was really pushing and has been pushing in a constructive way ever since. I pay tribute to what she has done.
I also extend thanks to the noble Baroness, Lady Hamwee, and to the noble Lord, Lord Kennedy. I very much enjoy our engagement. He is a model of what an opposition politician should be—if only he did not support Millwall, but nobody is perfect. I thank the noble Lord, Lord Shipley, as well for constructively engaging in this. I hope that these same key people will be there when we look at the next development in relation to domestic abuse. There is much that unites here and very little, if anything, that divides us. I look forward to that.
I also pay tribute to Women’s Aid and, indeed, to everyone working in this sector—Refuge, Imkaan and others—for the work they have done. In short, all parties and all parts of the House can take a bow with  this piece of legislation, which has engaged us all in a very positive, sensible and pragmatic way. I am most grateful for that. Thank you.
Bill passed and sent to the Commons.

Hate Crime
 - Statement

Lord Young of Cookham: My Lords, with the leave of the House I will now repeat an Answer to an Urgent Question given by Victoria Atkins in the other place yesterday.
“As you will appreciate, the letters described in the Question are part of an ongoing investigation, and as such I am not in a position to comment on them. However, the Government condemn the content of these letters as clearly abhorrent, with no place in decent society. The Government take hate crime and Islamophobia extremely seriously, and the UK has a robust legislative framework to respond to it.
Freedom of speech, freedom of worship, democracy, the rule of law and equal rights define us as a society. The Government are determined to promote these values actively, working in partnership with and alongside Muslim and indeed all faith communities to demonstrate that what we have in common is the best defence against extremists who would seek to divide us.
Our hate crime action plan, published in 2016, sets out our comprehensive approach to tackling hate crime. We have a strong legislative framework to tackle hate crime, including offences of inciting racial and religious hatred, and racial and religiously aggravated offences. The legislation provides equal protection under the law for all ethnic and religious groups. We have sources of expert advice on the nature and causes of hate crime through the Anti-Muslim Hatred Working Group and the Independent Advisory Group on Hate Crime.
We have committed £2.4 million over three years to help protect places of worship that have been subject to, or are vulnerable to, a hate crime attack. We also committed a further £1 million, following the terrible Finsbury Park terror attack in June last year, to help protect places of worship and associated community centres that are vulnerable to attack on racial, religious or ideological grounds. So far we have funded 45 mosques under both schemes.
We have also funded Tell MAMA to record anti-Muslim hatred incidents and to support victims. From this year, we have made it mandatory for police forces to disaggregate religious hate crime data held by the police to reveal the true scale and nature of the problem, which we are determined to tackle”.

Lord Kennedy of Southwark: My Lords, these disgusting letters have, quite righty, caused revulsion in our communities and been condemned. I pay tribute to community and faith leaders, charities and others for what they have done. They and others will not let us be divided. Domestic extremism needs to be dealt with. Can the noble Lord reassure us that the Anderson review recommendations to the Joint Terrorism Analysis Centre will start to produce the threat assessments for  domestic extremism? Can he reassure the House that the police have the resources they need? He will of course be aware that the police got less than half of what they asked for to deal with terrorism.

Lord Young of Cookham: On the first question, of course we want to take those recommendations forward, and perhaps I could write in more detail to the noble Lord on that. On the question of police resources, I am aware of the exchanges that took place in the other place yesterday. After speaking to all forces in England and Wales, the Government have provided a comprehensive funding settlement that will increase total investment in the police system by around £450 million in 2018-19. Overall public investment in policing will grow from £11.9 billion in 2015-16 to around £13 billion in 2018-19. We believe that the settlement enables police and crime commissioners to increase their direct funding by up to £270 million. It is then up to chief constables to decide how best to deploy officers in their force to effectively serve and engage their communities and to build trust and confidence. The Government have made it absolutely clear that this is one of the priorities that police forces must engage in as they deploy those resources.

Lord Paddick: My Lords, these letters are right-wing terrorism and incitement to terrorism. They are the unlawful use of violence and intimidation, especially against civilians, in pursuit of political aims, and we should call it terrorism. Taking up the point made by the noble Lord, Lord Kennedy, about police resources, in the other place the Minister was asked whether the police had sufficient resources to deal with these incidents. The Minister replied:
“Of course, we have increased them …We ask the police whether they have the resources that they need, and the Home Secretary acts accordingly”.
In this House last week, the noble Baroness, Lady Williams of Trafford, said:
“The police told us last year the number of additional police officers needed to do their job. We feel that in the budget they can attain this year they will have those police numbers—and more—to do the job that they do”.—[Official Report, 8/3/18; col. 1249.]
However, the Police Chiefs’ Council, in response to the most recent budget settlement, said:
“While the extra funding to tackle terrorism is welcomed, counterterrorism policing is considering tough choices as their settlement equates to a less than 2% increase on current spending at a time when demand has grown by 30%”.
Can the Minister say how these statements can be reconciled?

Lord Young of Cookham: My Lords, the noble Lord has been a policeman and is now a politician. He will know that the figures to which he has referred can be looked at from two dimensions. The police have their own perception. The Government have the one that I just set out: that there has been a real-terms increase in resources available to the police. On top of the resources that we are putting into the police, it is also important to put on the record that we are taking forward our plans for tackling hate crime. There are a number of other initiatives that we have taken in order to tackle far and extreme right-wing activism, for example. There is the Anti-Muslim Hatred Working  Group and its achievements. We have also funded Tell MAMA, which I mentioned a few moments ago, with £1.9 million. We are putting £1.2 million into Remembering Srebrenica and we are putting £2.4 million over three years into the security of all faith establishments, including mosques. There are a number of other initiatives, including £900,000 to support community projects, so on top of the resources for the police—and we can disagree about what perspective is put on those—there are other initiatives that we are taking to tackle hate crime.

Baroness Warsi: My Lords, it gives me no comfort or pleasure to say this, but for the sake of completeness I would like to put on record some details of the letter that has now been received by households across the United Kingdom, including those of some Members of Parliament. This is a letter that gives out points for punishing a Muslim. A few examples are: points for verbally abusing a Muslim, pulling the headscarf off a Muslim woman, throwing acid in the face of a Muslim, beating up a Muslim, torturing a Muslim with electrocution, butchering a Muslim with a knife—and it goes on. This needed to be put on record to describe what is happening in 2018.
I received a long message from a friend. At the end of it, she said:
“I urge you, Sayeeda, please do not go out on 3 April. It is Punish a Muslim day”.
I will, along with many other Muslims, be going out on 3 April because we will not be intimidated in this way. The facets of hate crime—children being bullied in playgrounds, women being assaulted on our streets, the media destroying reputations, the low-level and the high levels of Islamophobia that are now prevalent in our society—add up to what I call in my book the Seven Sins of Islamophobia, showing the way in which even the respectable now rationalise bigotry.
Will the Minister urge the Prime Minister to go further on this issue? I am delighted that the initiatives that he referred to—the cross-government Working Group on Anti-Muslim Hatred, Tell MAMA, Remembering Srebrenica—are all initiatives that I spearheaded in government, and which I am grateful are still being run by the Government. At what point, however, are we going to step this up and face down the awful scourge of Islamophobia—which, unfortunately, is increasing year by year?

Lord Young of Cookham: I applaud the courageous words of my noble friend and her statement that she will not be intimidated. She will know better than I do that many of the Muslim community are being intimidated by this leaflet when it arrives; they do not know where it came from or how the sender got their address. That is why there is a serious police investigation to find the source of the leaflets, and I urge anybody who receives one to report it and, as my noble friend suggested, to contact Tell MAMA.
The Government condemn the content of these letters. As I said in the Statement, it is abhorrent and has no place in a decent society. I know that the Prime Minister, who as Home Secretary took a number of initiatives in partnership with my noble friend, will  want to reflect on the exchanges in the other place yesterday and today to see whether we can build on some of the other initiatives that my noble friend referred to and whether there is further action that we can take in order to counter hate crime in this country today.

Baroness Hussein-Ece: My Lords, I also thank the noble Lord for his response and pay tribute to the noble Baroness, Lady Warsi, for all the work that she did. This is deeply tragic and upsetting, and it is clear that it is part of a larger campaign to vilify, divide and terrorise Muslim communities in this country. It is something that we must never give in to. I certainly will not be bowed by threats. I have had death threats purely because I come from Muslim heritage; I was told on social media that my head would be chopped off and put on a spike outside Parliament, and the police were involved. But I will not give in, and I am sure that many people will not. However, there are very vulnerable people in our community.
I say also that the media have to take responsibility for the constant drip-drip of vilification in their headlines and the finger-pointing at Muslims generally that we have seen gradually reaching fever pitch in this country. Programmes give time to peddlers of hate crimes. There are lurid headlines and finger-pointing, which I mentioned. Indeed, the Minister had to correct a Member of this House and point out that the sort of language that we are hearing from politicians has no place in this society.
I have one question. The Government mentioned the Prevent strategy. Do the people who take part in it have the expertise to deal with far-right extremism of this kind? We know that the strategy deals with Islamophobia, but do they have that kind of experience? How confident is he?

Lord Young of Cookham: The hate crime action plan that I referred to a moment ago is going to be refreshed this year, and we will take on board the points that she and other noble Lords have made. I will make one final point: yesterday there was a Commonwealth service in Westminster Abbey, where all faiths were represented and a script from every religion was read out. That is the sort of country that we are and should remain, and we should put the issues that the noble Baroness and others have referred to in the perspective of this broader picture.

Bishop of Newcastle: My Lords, on behalf of these Benches and, I am sure, on behalf of the Church, I want to say that any attack on a person or community on the basis of their faith or their race is abhorrent and has no place in a decent, civilised society. As a Christian leader I stand in solidarity with my Muslim friends and with all those in and outside this building who have been directly affected or are fearful and anxious. In the light of the Government’s forthcoming integration strategy, will the Minister please comment on what practical action the Government intend to take to strengthen the relationships at grass-roots level, where it matters so much, between Muslim and other religious communities and to reassure us that the necessary resources will be committed to make that meaningful?

Lord Young of Cookham: The Muslim community will be reassured by the words of solidarity that the right reverend Prelate has just outlined. On the question of the integration strategy, if there were to be a Statement on the strategy in the very near future, it would be made by my noble friend sitting next to me—and he will have taken on board the requests as to what should be in its contents.

United States Tariffs: Steel and Aluminium
 - Statement

Baroness Fairhead: My Lords, with the leave of the House, I shall now repeat a Statement made by my right honourable friend the Secretary of State for International Trade in another place. The Statement is as follows:
“Mr Speaker, on Thursday 8 March, President Trump announced that the United States would impose a tariff of 25% on steel imports and a 10% tariff on aluminium imports after a period of 15 days, with the final day being 23 March. Canada and Mexico, with which the United States is renegotiating the North American Free Trade Agreement, have been exempted from the tariffs, subject to the successful conclusion of the NAFTA negotiations.
For the products within the scope of the investigation, in 2017, the US accounted for 7% of UK steel exports and 3% of UK aluminium exports. In addition, the UK accounted for 1% of US steel imports and 0.1% of US aluminium imports, in tonnage, at a value of £360 million and £29 million respectively. The President outlined that there is scope for further countries and certain products to be exempted from the tariffs.
From a UK perspective, as Members of this House know, the UK and the US are strong partners and allies, and the US-UK economic and security relationship is crucial. The US is our largest single-nation trading partner, accounting for a fifth of all exports, worth more than £100 billion a year. It is also the top destination for outward direct investment by the UK and the single biggest source of inward investment into the UK. We have a long-standing and special relationship with the US. However, that does not mean that if we disagree with something, we will not say so, and we do disagree with the US decision to implement tariffs on steel and aluminium imports based on national security considerations.
Such unilateral trade measures have weak foundations in international law and are not consistent with the Department of Defense’s own judgment in an investigation that was conducted on the basis of national security. There is undoubtedly a problem of overcapacity in the global steel market, but our strong view is that a global problem requires a global solution, not unilateral action. The UK has worked hard to address the issue of overcapacity. The Prime Minister called for a forum of G20 members to tackle this issue, which my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy attended in Berlin in November. The forum agreed comprehensive policy solutions. Most recently, the  Prime Minister raised it during her visit to China, which is the world’s leading producer of steel and aluminium products. The UK will continue to work within the rules-based international trade system to tackle this problem.
Since the President asked the Department of Commerce to launch the investigation into the national security impact of steel and aluminium imports last April, the Government have made clear to the Administration on repeated occasions the potentially damaging impact of tariffs on the UK and EU steel and aluminium industries. The Prime Minister has raised her concerns directly with President Trump. I have spoken on several occasions to the Commerce Secretary and to the US Trade Representative about the investigation, including this afternoon. I spoke again today to the director-general of the World Trade Organization, Roberto Azevêdo, and I regularly speak to the EU Trade Commissioner, Cecilia Malmström. Several of my Cabinet colleagues have raised this issue with their opposite numbers. The Government have worked closely with the EU as part of our unified response. In addition, I assure right honourable and honourable colleagues that we have been in regular contact with the UK steel and aluminium industry throughout. I spoke to Gareth Stace at the weekend and again this afternoon.
There are two routes to petition the US for exemptions from the tariffs. The first, overseen by the US Trade Representative, will exempt countries with which the US has a strong national security relationship and which agree alternative means to address the threat to US national security from the relevant imports. The second, overseen by the Department of Commerce, will evaluate product exemptions if it is deemed there is no domestic US alternative and there are national security considerations, but only after a request for exclusion is made by a directly affected party located in the United States.
The Department for Business, Energy and Industrial Strategy will be assisting UK industry in working with US customers to build their cases for the exemption of individual products. I will be travelling to Washington this week for face-to-face meetings with the US Trade Representative, Ambassador Lighthizer and Commerce Secretary Wilbur Ross, as well as leading members of Congress. I will be making the case for the UK, as part of the EU. We have a strong defence and  security co-operation relationship. As close allies in NATO, permanent members of the UN Security Council and nuclear powers, close co-operation between the UK and the US is vital to international peace and security.
As the House is aware, our current membership of the European Union means that the European Commission will be co-ordinating the EU response, and we have been clear that we will continue to adhere to the duty of sincere co-operation. The EU response is focused on three possible areas. First, the European Commission is preparing to introduce immediate duties on the US, ahead of a WTO dispute. The EU has shared a draft list of proposed items for duties and we expect it to publish this list early next week. Secondly, the EU can apply a safeguard measure of its own to protect the steel and aluminium industries from being  damaged by an influx of exports to the EU caused by the displacing effect of US tariffs. Thirdly, the EU can pursue a dispute at the WTO. We are currently evaluating all aspects of these responses together.
We are clear that it is right to seek to defend our domestic industries from the direct and indirect impacts of these US tariffs, protecting both jobs and industrial capacity. We will also press for any  response from the EU to be measured and proportionate. It is important that the UK and the EU response works within the boundaries of the rules-based international trading system. Over the coming days, we will be working closely with British industry and the EU to seek swift clarification and mitigation. I commend this Statement to the House”.
My Lords, that concludes the Statement.

Lord Stevenson of Balmacara: My Lords, I thank the noble Baroness, Lady Fairhead, for repeating the Statement. This is my first opportunity to debate her at the Front Bench, and I am looking forward to working with her on the international trade Bill when it reaches your Lordships’ House.
We have, over the past year, heard regular statements about problems affecting our steel industry, although this announcement of tariffs on steel and aluminium imports, blatantly aimed at protecting US producers, must rank as one of the worst because of its implications more widely for free trade.
The House of Commons Library briefing paper on the steel industry in the United Kingdom 2016 suggested that the steel sector accounted for £1.6 billion of UK economic output, which is about 0.1% of the UK economy and 0.7% of our manufacturing activity. It has about 600 businesses, and 32,000 people are employed in the sector. The UK is the 18th-largest steel producer in the world, the fifth-largest in the EU after Germany, Italy, France and Spain. Approximately 15% of 350,000 tonnes of steel was exported directly to the United States in 2017.
We should extend our concern and support to the employees of British steel firms and their communities, which must be very worried about this questionable and ill judged unilateral decision by the USA. What assessment have the Government made of the impact of this decision on jobs in the steel sector and the economic hit that will be felt, particularly in communities outside London?
I have three further questions for the Minister. First, this announcement was not unexpected. It followed a series of pledges from President Trump to take what he calls “tough and decisive action” on perceived threats to the US national interest and to domestic producers as a result of international trade competition from overseas. It is very much in line with his “America first” platform. When did the Government become aware that President Trump was going to impose tariffs on imported steel and aluminium? What representations did the Government make to the White House prior to the announcement, and what assurances were sought that these tariffs would not be applied to UK exports?
Secondly, earlier this year, President Trump announced tariffs on imported washing machines and solar panels to give a boost to US producers in these sectors. President Trump also imposed a 30% tariff on imported solar cells, and last year the Department of Commerce sought to impose tariffs of up to 292% on imported narrow-body, medium-range jets until the US International Trade Commission accepted the arguments made by Bombardier and others and overturned that decision. What other sectors of the economy are the Government concerned about? What representations are they currently making to ensure that the UK will be able to export to the United States in the near term without facing unfair tariffs? For example, the President has mentioned additional protection for intellectual property. Given the strength of our creative industries, have the Government taken up that issue in particular?
Finally, the Secretary of State announced the establishment of a US-UK Trade and Investment Working Group in July last year, a group that has met twice since then. Given that the President has said he would welcome a trade war and thinks America would win it, what discussions have been had about steel, aluminium and the other new tariffs at these meetings? What assurances have been sought from the US Government about exemptions for UK exports in any free trade agreement that might be in consideration post Brexit?

Lord Purvis of Tweed: My Lords, we too are grateful to the Minister for repeating the Statement. Just at the time that we are loosening our ties with our largest single integrated market in the European Union, we see the next bilateral largest market in the United States moving towards a protectionist tone. Over recent months we have been repeatedly counselled by Ministers that we should look at not just the rhetoric of the United States President but at the actions. Now it is quite clear that there are repeated actions which are contrary to the interests of the British economy. The announcement of the Secretary of State today and of economic advisers last week are clear.
When I was in Buenos Aires as an observer at the ministerial conference of the WTO, the US left without a communiqué being signed. These worrying trends are clear to see. Last year, the Secretary of State, Dr Fox, said, while in the US, referring to the UK/US relationship:
“Firstly, we must lead by example, and work to encourage our trading partners across the world to support, and adhere to, the rules-based global trading system”.
Will the Minister therefore confirm that it is the view of Her Majesty’s Government that this action by the President is clearly contrary not only to how strong allies with a so-called special relationship should act but to international law?
We also know that in the presidential proclamation the President said that there would be a mechanism for reviewing the decision on impairing US national security if the countries concerned showed that their actions would not impair that national security. However, in recent discussions with the US, the EU and Japan could not discern on what basis these issues would be considered. What is Her Majesty’s Government’s view on these blackmail conditions that President Trump would seek to impose on allies for there to be adjustments to, or the removal of, these tariffs?
We have heard reference to the working group, which I have raised in this Chamber before. Did officials on the working group inform us that there was a likelihood of these tariffs being imposed on the United Kingdom? The Secretary of State indicated that he was due to visit the US and had no doubt planned to discuss the progress of the working group. What status does the working group now have given that we are clearly in a trade dispute?
Finally, we and our allies around the world continue to believe in free trade, even if the United States does not. How will we seek redress within the WTO mechanisms? Will the Minister reassure the House that we will be in precisely the same position as the European Union if we appeal for redress under the WTO mechanisms? This trend of protectionism cannot be in the interests of the United Kingdom. Clearly, our interests lie in standing shoulder to shoulder with our European Union allies on this issue.

Baroness Fairhead: My Lords, regarding the core of the problem, which is global excess in steel capacity around the world, we have been clear as a Government, and my right honourable friend the Prime Minister has been absolutely clear, that this is the wrong way to approach a global problem. The right way to approach it is the way we have been encouraging: through summits, where we have discussions about the measures countries will take to manage the problem in a balanced, global, multilateral way. We have been clear that we do not think this decision is in line with our approach, and we do not agree with it.
We are trying as a Government to work as part of the EU—as you know, we have a duty of sincere co-operation, which we fully expect and intend to fulfil. The first aim will be to stop this happening at all, through a process of negotiation and engagement. There have been multiple examples of engagement, from the Prime Minister to the President and the Secretary of State for International Trade, all the way through government. We will also work with the EU to look at the protections we can put in place if our aim cannot be achieved. My difficulty in addressing the comments of the noble Lord, Lord Stevenson of Balmacara, about the effect on jobs, is that we do not know what the state of the negotiations and engagement will be, what exemptions can be achieved and therefore what the effects will be on which products. It is too early to say.
However, we will absolutely be supporting UK steel and aluminium companies, through multilateral bodies, trying to ensure a global playing field, and, through various initiatives, ensuring that the EU is working at the global summit on 28 specific recommendations to address capacity. We believe that that will help our steel and aluminium industries.
We are also working with the steel industry. I mentioned that we have met with Gareth Stace, the director of UK Steel, and we are working within BEIS to ensure that UK steel companies which think they will be affected present their cases as actively as possible in the US, so that companies there ask for exemption for their products. We are encouraging trade unions and industry to work with us; we find that in the US there is significant support from both Republicans and Democrats in Congress for open and free trade.
The noble Lord, Lord Stevenson, asked how much of a heads up we had about this. There have been noises in the press about potential statements. It was broadly mooted before a meeting in Sofia, where my right honourable friend the Minister of State for Trade Policy in the DIT was present. It was discussed in broad terms then but, until an executive order was put in place on 8 March, it was speculation.
Before we leave the EU we clearly cannot be in any formal negotiations, so the trade and investment working group is discussing options only. It has been making progress and is due to meet, as planned, next month, so that work is continuing. I believe the noble Lord, Lord Purvis of Tweed, asked specifically about that. We welcome the US in saying that they look forward to a free trade agreement when the UK is in a position to negotiate one.
In terms of the EU and the safeguards, this Government remain absolutely committed to the WTO. We believe in the principles of free trade but in a rules-based, multilateral environment, and we will continue to support the WTO. We believe that our role here is to make sure that the benefits are seen and that we do not raise the temperature of the debate, and to engage with the EU and industry on behalf of the UK but as part of the EU.

Lord Rooker: I remind the Minister that the Secretary of State, whose Statement she has just repeated, has in the past, when talking about trade deals with the United States, mentioned agricultural products. Last week, President Trump—in one of his tweets; not in an official government statement—also linked agricultural products with the very issue of steel and aluminium. Can the Minister give a categoric assurance that the UK Government will not sell out the UK agricultural industry in order to get a deal over steel and aluminium?

Baroness Fairhead: Regarding the idea that this is in the national interest, we have been clear that the EU assessment is a safeguard. We are trying to stop this happening in the first place and trying to get exemptions. We are taking this forward through engagement, and we will need to create a list of measures with the EU that we will take on a proportionate basis if we do not progress. My sense is that the best thing we can do is to work on global steel capacity multilaterally. I think that that was the view of this Government and your Lordships’ House, who believe in that rules-based environment.

Viscount Hailsham: Does my noble friend agree that our response from within the European Union is more effective than it would be from without the European Union?

Baroness Fairhead: It is difficult to argue that one way or the other. I know that the UK has specific national security relationships with the US. We have had a long and enduring relationship on defence, strategy and economic growth, and therefore we have a significant position on our own. I cannot calibrate the difference but I know that we are part  of the EU, and on this matter we will be working alongside the EU and following the duty of sincere co-operation.

Lord Hannay of Chiswick: Does the Minister accept my view that it is very welcome that the Government are taking such a forthright attitude towards these measures taken by the United States—measures which seem to have no foundation whatever in the rules-based World Trade Organization order under which we have all lived so profitably for the last 70 years? Will she say quite unequivocally that we support all Cecilia Malmström’s efforts to get an exemption both for products and for the European Union as a whole, and that our support for her efforts is unequivocal? When the Secretary of State goes to Washington later this week, will he make it clear that we are supporting Cecilia Malmström’s efforts on our behalf? If the Minister will forgive me for correcting her, it is not only a question of sincere co-operation; we are part of a common commercial policy, and that means working to get an exemption for the whole European Union.
Finally, taking retaliatory measures is obviously extremely unpalatable, and taking a dispute settlement to the World Trade Organization is not something that we would have wished for. We are faced with a President of the United States who seems to think that trade wars are a good thing, but he had better learn some time that they are not.

Baroness Fairhead: I thank the noble Lord, Lord Hannay, for his remarks. We are engaging with the Trade Commissioner, Cecilia Malmström, and the Secretary of State will be acting on behalf of the UK but as part of the EU. We are working to stop this happening—job one will be to stop this happening; job 2 will be to get exemptions where we can—and the Secretary of State will be speaking on behalf of the EU and UK industry. I would welcome help from anyone in the industry and the unions who has an interest in this because there is a real issue here. We need to make sure that the benefits of free trade are fully realised, as we have seen in this country. A rules-based international system has lifted 1 billion people out of poverty and we do not want to set our face against that. The Secretary of State will be speaking to Cecilia Malmström later today ahead of his visit and he will feed back after his visit, so we are connected.

Lord Campbell of Pittenweem: My Lords, in the light of the events that we have been discussing, how long can the Government credibly advocate an enhanced trade deal with President Trump after Brexit? President Trump is one of the most volatile and capricious presidents in the history of the United States. He has taken actions which are contrary to the rules-based system and even today has sacked Secretary of State Tillerson for his independence of thought and, in particular, for his expressions of sympathy and support for the United Kingdom in relation to the events in Salisbury. How can we possibly put our trust in President Trump?

Baroness Fairhead: I thank the noble Lord. We have had a long and enduring relationship with the US and, in the past, when protectionist measures were applied—for example, in 2002—they were eventually rowed back and the relationship continued. It is important that we continue to demonstrate the benefits of free trade. The number of jobs expected to grow in the UK steel industry versus the number that might be lost in downstream industries indicate that potentially, this is not a good move in the US. A recent think tank report said that there could be a net loss of around 146,000 jobs in the US if this was put in place. We need to argue for free trade. We have a long and enduring relationship and the UK-US economic, national and defensive co-operation will endure long term into the future.

Lord Cormack: My Lords, I congratulate my noble friend on the way she is handling this delicate and tricky matter. I hope that she will be involved in some of these negotiations and, if she is, that she will reinforce the fact that we are working with friends and neighbours in the European Union and that this ought to be an object lesson to everyone who has the interests of our country at heart.

Baroness Fairhead: I thank my noble friend for his supportive words. Although officially I am not in the Trade Policy Unit—I am concentrating on exports—I obviously have interactions with it. It is likely that I will visit the US in a few weeks’ time and I will continue to represent the importance for us of addressing the excess steel capacity in the world, which is the root cause of the problem. We have made good progress along those lines. Where we see other countries behaving improperly, we are able to initiate anti-dumping or anti-subsidy measures. In the UK alone there are 45, which have proved to be effective. We will continue to fight but it is important that we do so within a rules-based system.

Lord Adonis: My Lords, I congratulate the Minister on her appointment, and we wish her well in her trade export work. We commiserate with her, however, for having to repeat that Statement from the Secretary of State for International Trade, which was a catalogue of name calling and impotence. If he had the influence he claims with his great long list of American friends, whom he will be lobbying over the next week or two, we would not have had these tariffs in the first place.
I have two questions. First, is the Minister in any way optimistic that President Trump will lift the tariff he has announced? Secondly, does the Minister not think that this situation gives the complete lie to the argument for leaving the European Union on the basis that Britain’s global trade will somehow compensate for the loss of trade with the European Union that we will suffer? In addition, does the Minister not agree that the Prime Minister’s choice of words in her Mansion House speech—she said that it is now an object of policy on the part of Her Majesty’s Government that we will have less market access to the European Union—looks ever more unwise with each tweet and utterance from President Trump?

Baroness Fairhead: I thank the noble Lord for his welcome. I do not agree with his sense of impotence regarding the Statement. To begin with, there are a whole range of things we are doing for global steel capacity. We are part of the EU and work within that framework. We are engaging on behalf of UK industry with the US and EU, and our hope is that we can negotiate. We are looking at exemptions—I would not like to give you the probability of which, if any, we will get, but we are certainly pushing very hard for that. We need to continue to engage and represent the UK as part of the EU in this regard.

Lord King of Bridgwater: While the Minister is absolutely right that we must act in full conjunction with the European Union, there is no question but that we have a very special relationship—in whatever way that is described—with the United States. Although the noble Lord, Lord Campbell, has said that we cannot possibly trust the President of the United States, he is the President and it is very important that the Secretary of State makes effective representations to him and his colleagues to ensure that we avoid what could otherwise be an extremely difficult situation.

Baroness Fairhead: I absolutely agree with my noble friend Lord King. Very strenuous representations will be made. We think these tariffs have a very weak legal basis, and the EU deems that this will enable some countermeasures and, possibly, safeguards to be put in place. We need to engage with this very important friend and ally to make sure we get above this and move on to the agenda of building wealth right across the world, and make sure that we have a sensible global approach to global problems.

Viscount Waverley: My Lords, when the Government consider which debating points to put before the United States, and to President Trump in particular, they might wish to remind him of his policy of putting America first. Will the Minister put on record, with supporting evidence, why these measures are detrimental to all US businesses?

Baroness Fairhead: There are studies available. I mentioned a US trade body which represents downstream industries that think they will be negatively affected and that the net effect on US jobs will also be negative—its study is already a public document. We are trying to avoid protectionist measures that stop the further development of economic trade and of developing countries. The latter could provide a ratchet effect and bring us all up together.

Lord West of Spithead: My Lords, the Statement explains at length how the Americans have made an assessment of the strategic requirement for a steel industry. That begs the question of why we have not made such an assessment. Do the Government believe that there is a strategic requirement for a viable steel industry in this country?

Baroness Fairhead: There is a question around whether it is a strategic national interest element, as the noble Lord mentioned, but we would question the President’s argument for it. I think that a lot of people would also  question the figure of 80%. In terms of this country, we believe in open and free trade and that we should be protecting our industry to make sure that the sector is not the victim of bad practice, which is what the rules-based regime does. We are also trying to support our industry by making sure that we adjust for any requirements that we put on it. For example, the Government have compensated the UK steel industry to the tune of more than £200 million for the additional costs linked to the climate change levy and the renewables targets. We believe that we should allow open and free trade and that we should protect robustly our businesses so that they are able to compete on a level playing field, and we will support them in any way we can to do so.

Lord Lawson of Blaby: My Lords, I congratulate my noble friend on her new responsibilities and on the way she has been answering these questions. This action by President Trump should not come as a surprise given that, so far as I recall, it was part of the manifesto, as it were, on which he was elected. Nevertheless, it is wholly deplorable and should be condemned. But is it not the case that we will be able to use the special relationship to which my noble friend Lord King and others have referred only once we leave the European Union? As long as we remain within the European Union, overseas trade is an EU competence and all we can do is support the European Union in the efforts that it is making. After we have left, it will be a different story.

Baroness Fairhead: I agree with my noble friend Lord Lawson that when we are an independent trading nation, we will be able very directly to use the relationship we have with a key ally. That said, given that we believe so strongly in global free trade within an international rules-based system, and given that we are part of the EU and have a duty to co-operate, we will use our special and deep relationship with the US to help the EU overall in progressing this with the US by trying to ensure that we have the best possible chance of eliminating the tariff or getting significant exemptions.

Lord Adonis: My Lords, does the noble Baroness agree that it is a complete fantasy if the noble Lord, Lord Lawson, thinks that we will be in a stronger position to negotiate with the United States when we do not have the weight of Europe behind us and we are acting entirely independently? Further, does she not think that that is a controlled experiment which can only do enormous harm to the country and that we would be better off not engaging in it in the first place?

Baroness Fairhead: We should be happy that we have a long, enduring and strong relationship with a very important partner and all our efforts should be concentrated on addressing where we do disagree, because where that is the case we will say so, and in this case we have done so. Equally, however, the numbers I have seen on our trade with the US show that we have $1 trillion-worth of mutual investment in each other’s economies. We should be taking that forward and using it to make sure that global trade really prospers around the world.

Smart Meters Bill
 - Second Reading

Moved by Lord Henley
That the Bill be now read a second time.

Lord Henley: My Lords, the rollout of smart meters is a key enabler for the transformation of our energy system. Smart meters are a critical part of the platform for the development of a smart grid and demand-side measures. Smart meters will facilitate greater flexibility in the production and consumption of energy by providing better information and improving communication between consumers, suppliers and network companies. In particular, they will improve the ability to shift demand to match supply, allowing us to make use of excess renewable electricity when it is available and use less electricity at peak times when it is more expensive. They will also improve distribution network companies’ understanding of and control over the use of their networks, allowing more power to flow through the existing wires without reinforcement, improving reliability and safety as well as reducing costs.
The development of a world-leading smart energy system, which delivers secure, cheaper and cleaner energy, is an important part of our industrial strategy. The vision of a smarter energy system, built on a platform of smart metering, is a prize worth striving for. The smart metering programme is one of the most significant infrastructure projects our country has seen. Over 50 million gas and electricity meters are expected to be installed in over 30 million homes and small businesses. The Government are committed to ensuring that all homes and small businesses are offered smart meters by the end of 2020, and considerable progress has been made. The enduring national data and communications service has been built, tested and launched. The Government have also established much of the regulatory, policy and technical framework necessary for this programme to be a success.
Energy suppliers are now actively installing smart and advanced meters, backed by Smart Energy GB’s national consumer awareness-raising campaigns. By September 2017, over 8.6 million smart and advanced meters were operating in homes and businesses across Great Britain. Rates of installation are also increasing, with around 400,000 being installed each month. Households and small businesses can start saving energy and money as soon as their smart meters are installed. Indeed, smart meters are expected to take £300 million off domestic energy bills in 2020 alone, rising to £1.2 billion a year by 2030. These are not small sums of money, and it is right that the Government continue to oversee and monitor the rollout to ensure that it delivers effectively, bringing benefits to GB consumers.
The costs of the rollout were debated extensively in another place, and the Government have listened to the concerns raised. Along with the regulator Ofgem, we closely monitor progress and costs to ensure that the significant benefit case, estimated at £5.7 billion net benefits, is secured. It is worth highlighting to the  House that, following those debates and as part of our broader commitment to transparency, we agreed to publish a further update of the cost-benefit analysis for the programme in 2019. The Bill received broad support at Third Reading in another place, as would be expected for a well-established programme that has its origins in the Energy Act 2008 and was considered further when its powers were amended in the Energy Act 2011. I hope that we can continue the same constructive debate that has characterised the Bill’s passage to date.
Let me turn to the Bill itself, which has three measures. The first measure in the Bill extends by five years the Government’s powers to direct the rollout of smart meters, which are due to expire in November 2018. The most important of these is the power to modify energy licence conditions and industry codes, for the purposes of supporting the smart metering rollout. The Government have used their powers to put in place minimum common technical standards and consumer safeguards, including in relation to data access and privacy. Extending these powers to 1 November 2023 is necessary to maintain coherence in the rollout of smart meters and ensure that relevant activities are co-ordinated. This could include situations where new technical solutions are required to address any residual challenges to full smart meter coverage to ease industry-wide delivery challenges. In addition, the Government will look to take opportunities to maximise benefits from smart meters once installed.
The second measure will enable the establishment of a special administration regime for the smart meter communication licensee—currently the Data Communications Company, or DCC—to ensure the continuity of the smart meter communication service in the unlikely event of the licensee’s insolvency. The DCC is a licensed private sector entity and provides the national communications infrastructure for smart metering. The DCC enables energy suppliers and networks to collect energy consumption data remotely and securely, supporting them in delivering the full benefits of smart metering. Meters operated within the DCC will also be fully interoperable, enabling consumers to switch their energy supplier and keep their smart services. The special administration regime for the smart meter communication licensee is similar to that for energy networks and energy suppliers. The provision of a special administration regime has also been adopted across other sectors, including rail and water. The DCC’s financial arrangements are constructed so as to make the risk of insolvency low. However, the special administration regime is a sensible precaution, with the aim of ensuring continuity of the DCC’s services and so protecting consumers and industry from the impact of any hiatus in service provision.
The third measure relates to the delivery of half-hourly electricity settlement by Ofgem. Half-hourly settlement is a key enabler of the move to a smart energy system and will help deliver benefits to consumers and the energy system by providing incentives on energy suppliers to develop and offer innovations such as time-of-use tariffs, which will enable customers to use energy when it is cheaper, reducing their bills and the costs of the future energy system. This will also help the energy system become more resilient as we move towards an  increasingly low-carbon generation mix. Ofgem is currently working with industry and consumer groups to assess the costs, benefits and market design options for market-wide half-hourly settlement. It intends to take a decision on whether and how to implement it, informed by an impact assessment, by the second half of 2019. This third measure will provide Ofgem with new powers that would allow it to deliver these reforms more swiftly and smoothly than under existing processes by allowing it to directly modify relevant industry codes and documents.
In summary, smart meter rollout will deliver a much-needed digital transformation to our energy system, providing the platform for a smarter, more flexible energy system that supports innovation in new, smart products and services. For consumers, smart meters provide the foundation for smarter living, creating opportunities for the emergence of innovative products and services, and taking us to a future where, for example, smart appliances such as dish-washers and fridges use energy when it is cheapest and to help reduce peak demand and energy system costs; energy networks know who has been affected by a power cut; and new tools support assisted living. Access to detailed, accurate energy consumption information will also support the delivery of tangible and immediate benefits to households and small businesses across Great Britain. I beg to move.

Lord Grantchester: My Lords, smart meters are a necessary and vital part of national infrastructure to provide secure energy supplies to consumers in a more efficient, cost-effective way. They will allow households to benefit from innovation in the energy market. The measures in the Bill extend the powers of the Secretary of State to amend regulations to roll out smart meters from 2018 to 2023. The Bill introduces a special administrative regime for the Data Communications Company—the DCC—as a precautionary measure to protect consumers in any event from insolvency in the critical DCC infrastructure. The Bill will enable half-hourly electricity readings via smart meters to be used in energy bills, necessary for rewarding consumers and allowing them to use energy in more cost-effective ways, ensuring a more efficient system.
The Minister is correct in saying that it is largely a technical Bill, limited in its scope to issues in the smart meter programme. I thank him and his Bill team for making so much time available to meet me and other Members of your Lordships’ House: it has been extremely helpful. On these Benches, the Bill remains relatively uncontroversial: Labour agrees with the measures in the Bill, agrees with the importance of smart meters and with the need to roll out their use as judiciously as possible. Nevertheless, there are a few buts and a few wider points to be made about the flaws in the smart meter rollout system, the inadequacy of the communications arrangements and the disruption caused between the introduction of SMETS 1 and SMETS 2 meters.
The first point of contention is: why has the programme taken so long? The powers granted to the Secretary of State to implement and direct the rollout of smart gas  and electricity meters go back to the Energy Act 2008. They now need extending from 2018 to 2023. Why did the DCC go live only in November 2016? The Minister may contend that everything is on track, the industry is committed and energy suppliers remain legally obliged to complete the rollout by the end of 2020. He may point to the fact that the smart meter data access and privacy framework was introduced in December 2012, which determines the level of access that energy suppliers, networks and authorised third parties can have to energy consumption data and determines the purposes for which these can be used. The Government have committed to concluding a review of this framework by the end of this year.
While it is understood that the Secretary of State needs time beyond 2018 to implement any conclusions from this review, it is nevertheless likely to be understood that the initial end date slipping beyond 2020 to 2023 is the real reason behind this extension. This view is reinforced when we hear of delays brought about by issues concerning the setting up of the DCC and the hesitancy brought about by the muddle between SMETS 1 and SMETS 2 meters, when the Government had to withdraw their early rollout obligation to install 1,500 SMETS 2 meters, or 0.025% of total meter points, whichever was the lower, by 1 February 2017. I believe that only about 100 SMETS 2 meters have been installed to date. Perhaps the Minister can update us.
SMETS 1 meters do not offer the same consumer benefits as SMETS 2 meters, with significant loss of smart functionality on any change in energy supplier by consumers. It is hard to understand why the Minister’s department has taken insufficient account of the consumer perspective around the importance of interoperability of smart meters. In changing suppliers, the consumer is not thrilled to learn that the SMETS 1 meter goes back to being a conventional meter, especially having paid the cost of implementation.
With the provision in the Bill to bring in half-hourly settlement, Ofgem is considering options for access to consumers’ half-hourly data to develop the data access regime and will be consulting on this, supported by a privacy impact assessment. This brings an added challenge to the understanding of what the offer should be in order for the consumer to agree to accept a smart meter.
The extension of powers in the Bill—a further five years from 2018 to 2023—is an indication that the Government fear that they might not meet the deadline of the end of 2020 to complete the rollout. The figures support this conclusion. As of February 2018, only 8 million SMETS 1 smart meters have been installed at homes and businesses. The target is 53 million gas and electricity meters at 30 million domestic and small non-domestic properties, with only two years to go to the deadline. Which?, the consumer organisation, has calculated that suppliers would need to be fitting 250,000 meters a week, equivalent to 24 every minute, around the clock, every day. The Government must state whether the 2020 target is still realistic and whether offers being accepted will lead to fulfilment within the timeframe. What probability has the programme of meeting this objective?
The next issue these delays give rise to concerns costs. Consumers are reminded that, even though most benefit accrues to the industry—of some £8 billion, rather than to consumers, who will benefit by some £6 billion—overall it must be said that there will be a net benefit of some £11 billion. Consumers are fearful that the potential cost impact of delay will wipe out the forecast net benefit. It is necessary that the National Audit Office updates its reports of 2011 and 2014 and reassesses the current economic case for the rollout of smart meters. Furthermore, it should look at whether the Government are on track to achieve their target to roll out smart meters by 2020 and are maximising the chances that smart meters will achieve their intended long-term benefits and advantages.
The main body of the Bill—nine out of 14 clauses—introduces the special administration regime for the DCC to ensure that the service continues should it get into funding or insolvency difficulties. Anxiety is rightly raised by Clause 7, which includes a provision that charges can be raised to make good any shortfall to meet the expenses of the DCC’s administration. It is not clear from the Bill or the Explanatory Notes why customers and users should foot this bill, especially when they have already borne the cost of the rollout in their energy bills. The DCC is a wholly-owned subsidiary of Capita plc which, it must be borne in mind, has recently issued a profit warning. Members of your Lordships’ House will recall that profit warnings were a precursor to the demise of Carillion. In Committee, we may wish to examine and test whether the safeguards in the Bill are adequate. The ownership of the DCC remains a concern.
Several concerns have also been raised about the smart metering implementation programme. I have already mentioned the smart meter problems between SMETS 1 and SMETS 2. Derek Lickorish, director of Secure Meters Limited, has said that as many as 20% of smart meters are operating in “dumb” mode because they have lost their smart functionality as customers have switched energy suppliers. Will the Minister confirm the steps being taken later this year to enable SMETS 1 meters to operate as SMETS 2 meters without a change of meter and an added cost? Does the Minister agree that this would remove the greatest barrier to the uptake of smart meters and greatly enhance the rollout programme?
There are further issues concerning the need to license meter asset providers—MAPs—and possible supply chain issues in the supply of meters. Issues also extend to the impact of half-hour billing options, which are the subject of three clauses in the Bill, allowing Ofgem to modify industry codes. The Government also need to have an answer to the transparency issues around the amount being raised for the rollout programme through customer bills, the monitoring of savings and the benefits being adequately transmitted to consumers. The Government need to be aware of unintended consequences of switching of demand around the clock and the waste issues around the disposal of obsolete meters.
In highlighting some of the issues around the smart meter rollout programme, we must not allow them to cloud the main objective that must be reached, which  is that Britain’s energy efficiency and public interaction to achieve this will be enhanced through smart meters and the development of a flexible energy system supporting innovation in smart products and services. We support the Bill.

Lord Teverson: My Lords, last Sunday evening my family were watching “Call the Midwife”. It was raining outside, as it often is in Cornwall. We have a number of outside sockets. The television suddenly stopped, much to my relief, as I am not a great fan of that programme—I am sorry to offend the Minister. Unfortunately, the further downside for me was that I had somehow to fix the electricity. This became my task, so I went out and I had to search for a torch. Then I had to find my way under the stairs, where there is a cupboard. I had to put the torch on. The meter, a dumb meter, is some two or three feet further away. I had to look at all the switches, and finally I managed to get the electricity back on.
How I wish that I had had a smart meter so that I could have got on to my iPhone and knocked a switch so that light was restored to Thornparks House down near Tregony in Cornwall. Alas, this was not the case. However, this underlined to me how important this programme should be. It is supposed to be an £11 billion programme. That is £11 billion of what I see as upgrading of domestic and commercial infrastructure and communications channels in the United Kingdom. That is why it is important.
How is it that in these days, when we use iPads and smartphones and with all the technical ability that we have, we still have so many people with these dumb electricity meters? My meter has, I think, never been read by anybody apart from me in the past 10 years because no one can get access to it from the outside. How is it that we still have this dumb technology when everything else has changed so much? The Minister will gather that I am a fan of this programme, but from now on the supportiveness of my speech goes downhill.
When I first joined this House 12 years ago in 2006, it happened to be the year that the smart meter operational framework was produced. I have always been interested in energy and one of my first visits—on the way up from Cornwall—was to a smart meter manufacturer in Winchester. They were the people who told me how great this technology was, what a fantastic future it should lead to and how obvious it was that it should be adopted, not just in terms of ease but of information and future distributed energy systems. It was quite clear. I became not just a fan, but a strong advocate. However, where are we now?
The noble Lord, Lord Grantchester, has gone through a little bit of the current position. My numbers may not be exactly the same, because they vary by source, but there are some 47 million meters in this country. There are 27 million properties, so a number, particularly commercial properties, have several meters. We have approximately 9 million SMETS 1 meters, which means that we have 39 million still to do. At 1 million a quarter, which roughly ties up with the Minister’s figure, that takes us to 2028. By that time, I suspect that I shall no longer be a Member of this House, but  I sincerely hope that we are able to meet that timetable. We also have about 100 SMETS 2 meters, most of which I understand have been installed on close friends and family of the producers as guinea pigs to see how these meters work. Last time I heard, they do not work particularly well. In fact, in the main they are fairly non-functional.
We should, however, give the Government their due. They have put back the final date for SMETS 1 installation from July this year to October and we have a 2020 target. The noble Lord, Lord Grantchester, maybe with his tongue in his cheek, asked the Minister whether it was possible to meet this target. Clearly it is not, so for goodness’ sake let us admit it, get back from la-la land into the real world and allow the industry, consumers and everybody else including the Government to plan this sensibly.
As I said, it is an £11 billion programme. That is massive in terms of future charges to electricity consumers. At the centre of this we have DCC, a Capita organisation. I understand that it has recently changed its management quite substantially. I certainly hope so. I looked through a list of just how late it had been, and I think there had been six postponements since 2014. We finally had it go live in November 2016, some years after it originally happened.
One thing I learned when I was very young was that, as a relative said to me, people who put lots of initials after their names are probably the ones you want to avoid, because they are trying to impress you and probably do not have the substance—I am sure noble Lords keep their peerage title in front of their name but have nothing behind. I stretch that example to reports and projects that are full of acronyms. When I went through all the background work to this, I was concerned: SMETS 1, SMETS 2, DCC, PPMID, CAD, IHD, CGI, SMSO, SMDA, SMOF, GCME, ESME, GBCS, SAR and of course MAPs, which are meter asset providers, which I will come back to later on. It seems to me that this process—this structure—is so difficult to understand and has been put together in such a difficult form, with a mixture of public and private, that it is designed to fail.
So far, I regret to say, it has been unable to deliver, despite in many ways the context being so simple, in that all you need is a bit of technology in your house—not necessarily under the stairs—which tells a monitor what you are doing in terms of electricity and maybe later allows you to participate in smart energy through a distributive grid as well. All that it then has to do is communicate usage in some way to a data hub, and all that data hub has to do is communicate with the electricity or gas supplier. That is all that is required, and yet 12 years later, where are we? We are a small way through a programme that we desperately need.
The Minister mentioned costs to some degree. I think the whole DCC budget to deliver this between 2013 and 2021, which goes on to consumers’ bills, has gone up from £1.3 billion to £2 billion. Its project management costs have gone up from £107 million to £374 million, and its set-up costs for subcontractors from £131 million to £948 million. DCC may be out of control, but government management of the process has clearly also been quite ineffective. In terms of timing, DCC has been late in going live by some  two years, while SMETS 1 has been put back from July to October. At the moment, SMETS 2 meters are not working and have no supply chain, so if we stick to the October 2018 date for stopping the installation of SMETS 1 smart meters, can the Minister explain to me what happens to all the installers between October and when we actually get SMETS 2 meters going? We have thousands of skilled people out there fitting 400,000 of these meters a month, but I cannot see how they are not all going to be out of a job in October. We then lose the skills, so how do we get the rest of the programme in, not just by 2020 but by whenever we manage to do it?
One of the things that has to be core to this whole programme is interoperability. I understand SMETS 1 meters are reasonably interoperable, but as I think the noble Lord, Lord Grantchester, said, if you change supplier—which government, we in Parliament and people interested in energy want people to do—there will be instances when you get stuck with a meter which is either dumb or has to be replaced by the new supplier, at an additional overall cost to the consumer, if not individually. That is not right. What will happen to all the SMETS 1 meters? Are they going to be stranded assets? I do not see how that will work.
Turning to meter asset providers, I am not greatly into the argument about whether they should be licenced or not. Again, the noble Lord, Lord Grantchester, brought this up; I am sure that it is an important issue. To me, the real issues relate to energy prices and meter finance. I may have been fairly naive, but I thought that the energy supply companies would probably finance them themselves. How naive can you get? Of course not: they do not do that; they get them off balance sheet and lease them, yet the lease costs of these machines have been extremely high and are still high. That will reflect, once again, on consumer prices. It is something that needs to be considered and possibly changed.
I have many questions to ask the Minister, but first I congratulate the Government on having the half-hour metering to make sure that we can actually push forward much greater use of smart meters for smart grids, and particularly for demand-side management—all of that area. However, they are going to have to be a lot cleverer in terms of explaining to the public that demand-side management is not compulsory, but voluntary, so that we do not have the Daily Mail headlines about people being forced to turn their heating off, or whatever.
I have not yet been told that the Government have solved the problems in relation to multi-occupational buildings. Are they anywhere nearer in solving them? On the compatibility and interoperability issues, the north is on a different communications system from the rest of the country and, as I understand it, it is incompatible with the remainder. Are all the 9 million SMETS 1 meters going to end up being stranded assets, and what do we do with them? Is this system now future-proof? I get the impression that it is not; that to really have an intelligent system, we are going to have to upgrade again. When are we going to have to do that? What policy action can we do centrally to bring down that rental cost of meters that is going to affect energy companies and that will inevitably be  passed on to consumers? How will that be changed? For goodness’ sake, how are we going to manage DCC better in the future? This seems to be an organisation that started late, has been complacent with public money, has had hugely overshot budgets and just requires much better management for the future. Lastly, the 2020 target date is just not possible. What is the real target date for that, and do we have a chance of actually meeting it?

Lord Broers: My Lords, I wish to speak only briefly. First, I strongly support the Government’s commitment to offer smart meters to all households and small businesses. I believe that the potential for realising significant reductions in energy use through the use of smart meters will, as claimed by BEIS, be realised. Ultimately, the meters will allow users to monitor how they are using electricity and gas, thereby learning how to minimise their consumption.
Secondly, I urge the Government to press ahead as quickly as possible to ensure the supply of smart meters that are capable of monitoring individual appliances, together with lighting, heating and cooling systems. Batteries and energy sources should, of course, also be included. It should not be necessary to wait for appliances to be fitted with their own transducers to communicate with the smart meters, as they can be connected with existing smart plugs—which are all over the place—that are capable of monitoring the power used by an individual appliance and communicating this to a smart meter. This can be done by using a personal area wireless network such as Zigbee, which is a low-power, low-data-rate proximity wireless network designed especially for small-scale projects such as this. It has been around for a long time.
It will only be after all systems consuming or generating power are monitored that the full benefits of smart meters will be realised, as it will then be possible, for example, to see where power has been used and generated over a month or even a year, and optimise consumers’ own personal situations. I urge the Minister to ensure that meters capable of this extended monitoring are installed as soon as possible, but at the same time recommend that this should not delay the installation of SMETS 1 meters, as these will allow us to realise the gains in efficiency that the ability to monitor consumption on a half-hourly basis allows. In conclusion, I add my support to the noble Lords, Lord Grantchester and Lord Teverson, in calling for the Government to just get on with it, please.

Baroness Manzoor: My Lords, I strongly support the Bill and I thank the Minister for so elegantly laying out its three aspects. He will be pleased to hear that I will not restate them, but it is worth restating that the purpose of the Bill is that every household and small business in the UK will be offered a smart meter by 2020—although of course there is no obligation for anyone to accept that offer.
I am viewing the Bill through the prism of a consumer. To that end, I was interested to note that, according to research undertaken by comparethemarket.com, one in  five people did not want a smart meter. The Government will therefore have to undertake some more effective ways of communicating to the public what smart meters can and cannot do, particularly if they want to hit their target by 2020. As has already been stated, 53 million meters will need to be rolled out and then rolled on to the new national communications network. As the noble Lord, Lord Grantchester, said, that equates to 24 meters a minute. It is also of concern that some of the largest suppliers of energy say that the rising cost of the smart meter programme is one of the main reasons for the rise in customers’ energy bills.
To ensure transparency in bill costs, energy companies should have a duty to further break down their billing costs to the consumer. Billing costs could show what cost is due to energy generation; what proportion of the bill is due to distribution; what proportion is due to overhead costs such as billing, smart meters and customer services; what proportion is for installation and management costs for smart meters; and what proportion is for any data requests from users. I would like the Bill to incorporate such a duty of transparency, thus enabling customers to make more informed choices, aiding competition and helping to bring energy costs further down. If such a duty is not put in the Bill, will the Minister give consideration to including one in regulations?
Consumers’ perceptions have not been aided by the functional issues experienced with the first generation of smart meters—the SMET 1s, as has been said—which have left some consumers concerned about having a smart meter installed. Users of SMET 1s have had problems keeping the benefits of their smart meter when they switch energy suppliers. This is because the SMETS 1 meter became defunct, or dumb, as it could not connect to the new national communications network. This meant that SMET 1s could not talk to the consumer’s new energy supplier.
I understand that the second generation of smart meters, the SMET 2s, have overcome this problem, but the issue of operability of SMETS 1 meters still needs to be addressed. Will they be replaced, or can they be upgraded to enable compatibility with the new communications network? What action are the Government taking to inform customers that operability problems have now been resolved—if they have—and that the SMETS 1 meters will not be installed by energy suppliers unless they are fully functional on the new communications network? And who will pay for the upgrade?
The Government estimate that smart metering will deliver net benefits to GB of £5.7 billion, equating to £300 million off domestic energy bills in 2020 and £1.2 billion a year by 2030, and the Minister has restated that. Breaking that down, it is expected that individual households will save on average approximately £11 a year on their energy bills by 2020, rising to £47 in 2030.
Smart meters should also address the imbalance in information between suppliers and their customers, because customers will be able to see the level and cost of the energy that they are using in real time and use that knowledge to change to a different tariff or supplier or better plan when they use their energy, thus  enabling budgeting. This is particularly important for low-income households and those who use prepayment meters. The smart meter does not need topping up and these customers will no longer have to leave home to buy top-ups for their meter.
As well as allowing consumers to make informed choices, smart meters should put an end to estimated bills because consumers and the energy suppliers know the uptake of usage down to half-hour intervals. To ensure that this benefit is fully realised, it is important that energy suppliers then do not encourage customers to pay via annual payment plans—otherwise, customers receive estimated bills with potentially large credit balances left at the end of the year.
There have also been stories in the press about a few smart meters malfunctioning by sending out the wrong usage readings to their energy supplier. Can my noble friend the Minister say how likely it is for a smart meter to be dysfunctional, and what happens when the usage reading is inaccurate? What redress does the consumer have? There have also been reports that because the smart meter technology works via internet—we have already heard this from the noble Lord, Lord Teverson—there are connection problems in places such as high-rise flats or in some rural communities where coverage is poor. Despite this, I understand that the Government expect more than 99.25% of premises and homes to be covered by the national communication network. Can my noble friend confirm that this figure is accurate, and are there any plans to ensure that the communications network gives 100% coverage?
Despite some teething problems, the principle behind smart meters is important. Not only does it allow the companies to assess in real time the energy uptake by the nation and plan accordingly for it, it is likely to aid the future development of innovative smart products, as we heard from the Minister, such as dishwashers, smart kettles, fridges, washing machines, and indeed, other new services. But with such smart technology comes dangers to security. Can my noble friend say a few words on what safeguards have been implemented to ensure that the new communications network is safe from unintended interference and sabotage? How will DCC keep customers’ data safe, and how long will customers’ records be kept?
To conclude, the benefits and flexibility of smart meter usage can be fully realised only if there is effective training of those who install them, and if customers are trained in how to use these meters and the new technology effectively. Smart meters and such technology are our future and we should fully embrace their benefits. The Government need to ensure that customers can access the cheapest tariffs and ensure that smart meters work for everyone: customers, the energy companies and our environment.

Lord Whitty: My Lords, like the noble Lord, Lord Teverson, and my noble friend Lord Grantchester, I am a bit schizophrenic about this Bill. On the one hand, I welcome some of its provisions, but on the other I look at the history of the rollout of the smart meters programme with deep depression. It has had mixed results, to put it mildly.
On the other hand again, some of the benefits of smart meters have been realised and a significant proportion of consumers have changed their behaviour as a result, so that gives us some cause for hope. I also have some fairly substantial strands of sorrow and anger about this, some of which goes back to proceedings on the Energy Bill 2008. This, I am afraid, is the “I told you so” bit in my speech. I took quite an active part in those proceedings and told the then Government of my concerns. Some of them have already been mentioned; they relate to the very limited interoperability of the first generation of smart meters, which meant that the ability of consumers to switch was greatly restricted and they were left with stranded assets—and for smart meters, they were pretty dumb in many respects.
I also mentioned the inadequate relationship between this massive, £11 billion programme of installing smart meters and actually getting them into every household in the country. That programme should have been accompanied by more general advice, direction and help on installing energy efficiency equipment in the home.
I also was deeply perturbed by the basic premise of the delivery of the smart meters programme: requiring that it be carried out by the supply companies. That led to behaviour based on self-interest and to inefficient delivery. It would have been far better if the state itself—although I could not really have expected this of even the coalition Government, and certainly not this one—or the network companies had proceeded street by street, instead of every building in every area having to have a meter installed by different suppliers.
The way in which different suppliers have done it has varied significantly. I thought at the time that the central strategic decision to give responsibility of delivery to the supply companies was the wrong one, although it is probably too late to change that now. It has also helped to increase consumer distrust in the programme itself, over and above the natural resistance of some consumers to new technology.
I was also perturbed and somewhat baffled by the exact responsibilities and status of DCC. I remember asking the then Minister to explain exactly what this body would be. It was only after we had finished with the Bill that the contract was given to Capita, which alarmed me even more. Following the Carillion collapse, the Bill must ensure that, if Capita similarly collapses, which looked possible a week or two ago—I of course hope it will not—provision is made for dealing with its insolvency. Its performance, as noble Lords have pointed out, has not been that great, but the possibility of its insolvency undermines this whole process. The cost of that is going to fall, once again, on the consumers, who, through their bills, are already paying for the programme as a whole.
That is the end of the “I told you so” part of my speech—but I did tell you so. Some fairly wrong strategic decisions were taken at the beginning of this programme. Partly as a result of that, we are of course behind on the timetable.
On a more positive note, however, we are now moving to the next generation of smart meters. I hope we can do so rapidly, and that there will be no performance problems. The Minister should spell out clearly the timescale. A concomitant point is that we will need at  some point to replace the first generation with a second and a third generation. Otherwise, some 8 million to 9 million people will effectively have fairly dumb meters which, although they can induce some change in behaviour, will not do the full job that the cutting-edge technology could deliver. Therefore, we need to speed up the process. I would like the Minister to spell out somewhere in this Bill the process for retrofitting and replacement of the first generation, as well as the timetable for introducing further metering in the next generation.
More positively, some significant research has shown that even some of the dumber smart meters have enabled people to take greater interest in their energy consumption and make related decisions on light bulbs, switching off washing machines and changing the time at which they operate appliances, thereby saving energy. So the outcome may well eventually be very positive. The downside, though, is that there has also been some negative reaction to smart meters. I hope we will be able to overcome that.
I very much welcome the move to half-hourly billing. That brings its own problems in terms of privacy and security but I hope that we will find a way to reassure consumers in that respect. Once we move to half-hourly billing, consumers could well get on top of making serious improvements in their energy efficiency behaviour and the energy performance of their homes. I am very much in favour of that so long as the privacy downsides are addressed in the Ofgem regulations.
I still have problems with how this programme is being delivered in premises in multiple occupation that have multiple suppliers, in both the social housing and the private sectors. There has been some progress on the relationship between smart meters and prepayment meters, but the phase we are discussing ought to turn that into something much more positive because some of the most vulnerable consumers are prepayment consumers and smart meters should help them. We have some good examples of that. We need to build on those and make this process more systematic.
I have mentioned the situation with DCC. I recognise that the Government had to move on that. It was a bit of a panic move which did not reflect the original concept of the Bill, but it was probably necessary. However, it underlines what my noble friend Lord Haskel said at Question Time about the reliance on single, near monopolistic outsourcing companies for the delivery of key elements of our infrastructure. I hope that we will address that in broader terms as well as in relation to this specific programme.
I still think that there is an insufficiently close relationship between the installation of smart meters and other energy efficiency measures. However, we should perhaps look at the totality of energy efficiency interventions as we move away from the ECO, as we have known it, and consider all the current programmes so that we can maximise energy efficiency house by house and company by company.
So far there is a very mixed picture with a lot of downsides. We have the opportunity to move to the next stage in a more positive vein. However, while the Bill introduces some useful provisions, in particular  half-hourly billing, they are not sufficient to ensure the full delivery of the programme and the full step-change in our energy efficiency performance which those of us who supported the concept in the first place looked for.

Baroness Maddock: My Lords, the Minister said in his opening comments that this is a small technical Bill and, as is his wont, painted a very rosy picture. As we have heard, some of it is rosy but some of it is not quite so rosy.
It is difficult not to be too repetitive because noble Lords around the House agree that the Bill contains some positive measures and some negative measures. I think that very few people would disagree that smart meters will make a large contribution to our national energy infrastructure. We have heard, and we know, that they can assist consumers and energy suppliers to use energy more efficiently and to reduce costs on both sides. However, as others have said, we somehow fail to carry to fruition many energy and energy efficiency programmes in an efficient, timely and cost-effective way. The smart meters rollout is no exception and that is why we have this Bill before us today.
As others, including the Minister, have said, the Bill extends the Secretary of State’s powers to develop, amend and oversee regulations concerning the licensing of smart meters for gas and electricity usage. Presumably, we are discussing this issue because not everything has gone well in this area. The Bill sets up a new special administrative regime for the national smart meter communications and data service provider—in short, the DCC.
In the event of insolvency, the noble Lord, Lord Whitty, highlighted many moons ago that there was a problem. Was this considered? We now know it was considered in the original discussions in 2008 but, nevertheless, we went along with it. We now have problems, and we have seen recently that dealing with it has been very slow.
The Bill also introduces new powers to modify industry codes and instruments directly, to deliver a market-wide, half-hourly settlement that uses the smart meter data. There is agreement around the House that this would be a good thing but only, as my noble friend Lord Teverson said, if the meters work. The clause dealing with this came rather late in the day in another place. Will the Minister explain why? The original plan was that every household and small business in the UK would be offered a smart meter. We have already heard from others that the plan was for 2020; the Government now need proposals in this Bill giving them until 2023, and doubts have been raised this afternoon about whether they can do it by then. We have heard all sorts of statistics about how many meters will have to be put in every week to make this happen. Other concerns raised this afternoon concern data protection and privacy. The noble Lord, Lord Whitty, gave us more detail on that.
We have also heard concerns about the installation and selling of this equipment to consumers. I have a particular gripe—I get rung up about smart meters and I realise that I am also being told we need to switch suppliers. I am not very good at doing this, but my husband has done it. I am concerned that, if I have  a smart meter, I might not be able to have SMETS 1 and I may not be able to switch my supplier again; therefore, I am not prepared to say yes to the installation. When you have a conversation about this with someone representing the supplier, trying to persuade you, they do not seem to understand what you are talking about. There is a big issue about how people talk to consumers when they are trying to persuade them to have a smart meter.
We have also heard about costs. We know that around £11 billion will be spent and there have been projections of a net benefit of £5.8 billion. But, as others have highlighted, rollout is happening more slowly, so it is not clear that the cost benefit will work out as projected. The National Audit Office is reviewing the programme and plans to report this summer, looking specifically at whether the programme is on track and whether the economic case is still the same. I will not repeat how many meters have been put into houses; the big issue is that, while SMETS 1 installation has gone ahead, albeit not as fast as we would like, SMETS 2 is very slow. I have not done as much detailed digging as my noble friend Lord Teverson; the figures he put forward this afternoon are pretty frightening.
Good smart meters can play a part in helping those who find it difficult to pay for their energy—as the noble Lord, Lord Whitty, mentioned. I am vice-president of National Energy Action, a charity that campaigns on fuel poverty, and I am grateful for its briefing. It is supportive of the programme, realising that it has good potential for helping people in fuel poverty. One thing it is particularly concerned about is the role of Ofgem in monitoring and enforcing minimum standards under the installation code of practice, because this is fundamental to the successful rollout. At the moment, there is little information about how or when individual suppliers are rolling out this technology or about their approach to engaging with customers, particularly vulnerable customers—I have talked about people like me—to ensure that they capture the benefits of more accurate billing, which the noble Baroness, Lady Manzoor, referred to. Nor is there much information about how they are helping people to get more of a handle on how they use their energy.
NEA would like to see Ofgem publish the annual rollout plans of individual suppliers and details of how many meters are installed annually. This could be broken down between SMETS 1 and SMETS 2 and the number of smart meters operating in pre-payment mode for those who find it really difficult to pay their energy bills. This could be done each quarter in line with other Ofgem E-Serve quarterly reporting. This information is not commercially sensitive and it would enable bodies such as NEA to offer bespoke advice to customers about when they can expect to benefit from their smart meters.
NEA also stresses that data protection should not be a key reason why more geographic-specific information cannot be put in the public domain. There are concerns and questions about data and data protection, which the noble Lord, Lord Whitty, talked about, but we ought to be able to use the information without people’s data being used in the wrong way. If we developed a GIS-based map of where smart meters have been installed, that would be a great help to organisations  all around the country—for example, to charities such as NEA. They could follow up the installations, amplifying the benefits and helping people by providing more extensive behaviour-change advice and support. It is clear that not all installers are providing this help—some are but some are not.
There is one acute concern about installations. We need to know that when an engineer leaves after putting in a smart meter, the heating still works. They might have said that a gas appliance was unsafe and turned it off. Obviously we want things to be safe but at the moment no government policy is in place to help people—particularly vulnerable households—to change a boiler, as used to be the case under the ECO. I had an exchange with the Minister about this back in the autumn because people were not able to replace their boilers—a situation that has got even worse during this cold winter. When I asked him about it, the Minister’s answer was, “Well, of course, we really believe in energy conservation now, and that’s where all the money is going”, but that does not help the person whose boiler needs to be replaced in the winter. We need to do both. From a sedentary position my noble friend says that it is more efficient.
NEA spends a lot of time talking to consumers and that is why it is so concerned about some of the issues that are not going as smoothly as they should. There is also an issue around price caps and pre-payment meters. The meter price cap is very closely linked to the smart meter rollout and to SMETS 2, and I hope that the Minister will be able to tell us a little more about that.
We have heard that Clauses 11 to 13 create powers to oversee the smart meter programme, but I have already highlighted that Ofgem is finding this quite difficult. However, it has now been asked to deal also with the half-hourly settlement. As others have said, this is a good thing because not only does it enable suppliers to offer different prices at different times of day—we have heard about other things that can help people to use their electric products more efficiently in the home—but it can assist in developing, nationwide, a more demand-led energy supply system. The noble Lord, Lord Whitty, my noble friend Lord Teverson and I have raised this issue in successive energy Bills in this House. At one time it seemed that the Government did not understand that at all but they have cottoned on to it now and it is a welcome addition to the Bill.
Many people still do not have meters but research has shown that people who have them have changed their behaviour and are quite satisfied. In one survey, 75% of people said that they would recommend the meter to someone else; and 80% claimed that they were saving energy through their behavioural change.
If this is to continue we need to make sure that SMETS 2, the cleverer meter—so called—rolls out properly. People need to be able to change their supplier because we have two government policies working against each other—persuading people to have a meter, persuading them to change—and the two do not go together.
I welcome the Bill, as do many other noble Lords, but I am disappointed because it has highlighted many problems that perhaps could have been avoided. We keep falling into the same trap on several issues: we are bad at cost-benefit analysis and adjusting as time goes  along; and we are bad at understanding human behaviour, which I appreciate is difficult. We assume all kinds of things about human behaviour which turn out not to be quite right. We need to be better at handling different scenarios.
I hope the Minister can assure the House that the programme will go forward in a more rosy way—I am sure he will; he usually does—and that he can reassure the House on some of the issues that have been raised today. There is common ground across the House and I look forward to his reply.

Baroness Featherstone: My Lords, this has been a good debate and a master class in damning the Government with faint praise.
In the future our energy supply, transmission and storage—everything—will change. The future will be different from the past. The big six will no longer be the big six but, we hope, just six among the many. There will be on-grid and off-grid, feed-in and feed-out. The customer will be at the heart of managing their own usage or contribution, and there will be savings of energy and in the energy cost to customers. This is an energy revolution and smart meters are a vital part of that future.
However, as many have said across this House, before they went downhill, smart energy needs to be smart. That is the lament and sorrow of the Bill because things have not happened in the right way: not the smart meter, because the first one was not interoperable—I will be grateful when I do not have to say “interoperable” too often; not the data collection; not the rollout; not the selling; and not the installation. There were delays to completing the rollout; costs which might result from delays to the system; issues around the financial security of DCC and the financial status of its parent company, Capita. It was helpfully pointed out by the noble Lord, Lord Grantchester, that there has been a recent profit warning. There were concerns over whether appropriate data protection and privacy would be provided; connectivity concerns; issues around installation visits; concerns about doorstep selling; problems with the disconnection and disposal of old meters; and problems around inaccessible homes. Between them, Members across the House have raised all those issues.
On the hoped-for benefits, in the other place the Secretary of State, Greg Clark, said that a third of the savings come from potential reductions in the use of energy, just over 40% come from the suppliers’ costs saving—not having to read meters and so on—and that he expects those savings to be passed on to the customers in their bills. I am concerned that this was put as an expectation rather than an instruction. What will the Government do if this expectation is not met? I do not think we should leave this to expectation. We should be able to assure the customer and the client that these savings will be passed on, particularly since, as many across the House have pointed out, they are paying for the whole system.
Another key issue is the extent to which data will be private. We need absolute clarity over who owns that data and for how long, who may have access to it and  how it will be protected—and not just clarity but assurances on how such information might be used and by whom, and how an individual can control, with absolute confidence, access to it. Will the proposed review of data usage be widely drawn and will it be published?
Is the Minister aware that some people with disabilities have concerns about this system? As we know, people with disabilities already pay more because of higher fuel consumption, as they are quite often at home all day. I talked to one of my noble friends only today who was very concerned she would be made to feel guilty if she could not use or calibrate a smart meter to use power at a different time of day because her needs were at critical times. Could the Minister speak to that? The Minister also raised the issue of smart energy awareness. Perhaps some of those campaigns could target those with disabilities and the most vulnerable.
Looking outside of that range of issues still needing attention, the Government want the Bill to have a narrow focus on three key things. The first is the extension of existing powers, which of course they want—and need to rectify all the things that have gone wrong. I shall not reiterate all those issues other than to say that 8.5 million first-generation meters have been installed and the Government are hoping to see the rollout of SMETS 2 meters, which do not have the interoperability problems of the older meters. In a private letter to energy companies, the Government said that systems designed to handle the newer meters were not ready and so they moved back the deadline for rolling them out from July to October. That means that more than 1 million extra first-generation smart meters will be fitted in homes, despite, as others have said, the devices being criticised for going dumb when customers switch. With the deadline moving from July to October, hundreds of thousands of people will receive the older devices. Therefore, SMETS 2 and the DCC are critical, and this sort of delay, along with all the issues to do with dealing with the installation of meters in your own home, with variable fitters and information, is damaging.
One of the challenges, as mentioned by my noble friend Lady Maddock, is that the reputation of smart meters is suffering because of all the problems that have arisen, which is damaging people’s willingness to adopt the new system. The extension of the Government’s powers and the delay to the rollout of SMETS 2 are concerning. It appears the Government are extending the period because of original targets being missed and they are worried there will be further issues for which an extension of powers will be required. Will the Minister confirm that this is the rationale for the extension of powers? Will he also confirm that their extension until 2023 is not connected to a potential overrun of the 2020 deadline for the rollout of the new meters—although a number of noble Lords have put a question mark on that deadline?
The second part of the Bill concerns the introduction of,
“a special administration regime for the national smart meter communication and data service provider … ‘DCC’ … in the event of its insolvency”.
I am unsure whether we have 100 SMETS 2 meters installed or 80—or 250, as was discussed in Committee in the other place. If the number is that small, there has to be a question about how robust and how well tested the function of the DCC is at that level. That does not seem an adequate supply of data to test that system. Coming to the DCC itself and the concerns over Capita’s financial status, what checks are the Government carrying out on Capita? In addition, does the role of the special administration regime exist as of the passage of this Bill or only when there has been trouble, or can it kick in in advance of any collapse in the system? What are the protections for the consumer in this event? If a special administration regime has to be put in place because there has been a failure on the part of DCC or Capita, what can official scrutineers and the public expect in the way of transparency and information about what has happened? Can the Minister give an assurance that we parliamentarians and the public at large will not be kept in the dark about why a special administration regime has been put in place? Obviously, a further concern has to be that the costs will be passed on to the consumer. Can the Minister explain why the consumer should be in any way liable for such a failure? Would any of the costs pertaining to such a failure fall to the consumer? Would it be the whole cost or part of it? In responding, it would be helpful if the Minister could set out the costs and savings to consumers and other players so that we can see who is benefiting and who is paying, and whether we think that is fair.
I turn to the provision of new powers for Ofgem to directly modify industry codes and documents to deliver a market-wide half-hourly settlement which uses smart metering data. Noble Lords across the House have welcomed this because it is the future. The idea is that incentives are placed on suppliers to meet their customers’ demands in each half hour of the day, and smart metering is intended to produce accurate half-hourly reports to get a better settlement and thus drive innovation and the efficient use of energy. However, suppliers can already choose to settle with consumers on a half-hourly basis via an elective half-hourly settlement, but Ofgem believes that it will have to make all suppliers do this to get the best results for customers. That, as I understand it, is a decision that Ofgem will take in the second half of 2019 and will be subject to a cost-benefit analysis, which I was pleased to hear the Minister say will be published.
However, the strange part is that it was introduced in the other place through a government amendment. That is of great concern. Why did the Government know only at the end of the process that such an analysis would be needed? One does kind of expect that, given that this is a complex new system, the Government would have known in advance that an analysis was necessary. Perhaps the Minister can explain its late appearance.
Lastly, I want to reflect on the contribution made by my noble friend Lord Teverson. I am glad he will not have to fix the electricity under the stairs any more. He recognises, as have other noble Lords across the House, how important this programme is. He said that the acronyms were suspicious. Perhaps the Minister can allay our suspicions, although I have to say that  the acronyms are not as bad as they were when I was a Minister in DfID. My noble friend Lady Maddock pointed out that some of us think that parts of the Bill are rosy, but then referred to the rest of it as having rosacea, or words to that effect. She spoke for those in fuel poverty and expressed her concern about the role of Ofgem under the code of practice and the approach being taken towards vulnerable people. I would welcome it if the Minister could pay special attention to responding to those and other points raised in the debate.

Lord Lennie: My Lords, I should start by making a declaration—or perhaps a confession. I am a smart meter user. I accepted the offer made by the company. It is a SMETS 1, so it is not doing me much good in terms of reducing my consumption or the cost—but at least I have one. That, I think, may be unique among Members of this House, but not so much so among the wider public. I also thought until yesterday that we might be able to have a debate which did not involve the European Union. However, having seen E.ON’s and RWE’s proposals, we are reminded that this is not taking place in a vacuum and that E.ON will now become the major provider for the customers of electricity while RWE is getting back into green research and the provision of electricity—reversing a decision that was taken before our decision to come out of the European Union.
I thank all noble Lords who have taken part in the debate. I share with everyone their support for the Bill—with reservations, and unfortunately it is those reservations which are going to take up most of my time. I thank in particular my noble friend Lord Grantchester for his analysis at the start of the debate. It has saved me a lot of time because he has already done the work. I shall try to avoid any repetition during the course of what I have to say. I also thank the Minister for the meetings and briefings we have had about the proposals prior to this debate. They have been very helpful in our preparations.
The Bill has three stated interrelated purposes. The first is extending the powers of the Secretary of State in regulations for smart meters. The second is introducing a special administrative regime, the SAR, with a Data Communications Company, the DCC, to ensure that service continues in the event of their insolvency. The third is to introduce new powers to allow Ofgem to facilitate half-hourly settlements.
First, the extension of powers that are currently due to expire on 1 November 2018. The Bill seeks a further five-year period, until 2023, during which time the completion of the rollout of the smart meters and their claimed benefits will have become evident. That is the plan. What are the chances of this and what benefits will consumers see? The rollout requires companies to have offered every household and small business, and there are 40 million to 50 million of them, a meter by the end of 2020. The offer of the smart meter 1 has been slowed down, while the smart meter 2 is in some kind of preparatory phase and is being tested for workability and interoperability. So the chances of meeting the 2020 deadline are fast receding, unless the Government announce some huge increase of capacity to achieve their intention.  The benefits to consumers are deemed to be so positive that they will take little persuasion—but, in this House and in other places, the consumer seems less trusting of the benefits than the Government seem to think. The record tells a different story.
Thus far, the second-generation SMETS 2 have been installed in only 70, perhaps 100, households out of a total of 50 million. If the SMETS 1s can be upgraded to SMETS 2 capability, it will account for some of the increase—but it will still need three times the current rate of approach, interchange and offer of these meters to achieve the 2020 deadline.
The benefit for the customer is that he or she will be in control of their pattern of energy usage, with real-time information being provided and an end to estimated billing. That is true: the smart meter tells you how much you have spent today. At any point in time, it will give you a scare. You have spent £5, £10 or whatever it is you have spent today. It does not tell you anything about what it is that is consuming that money. The DCC will be provided with a half-hour readout of the overall usage of our electricity consumption in order to benefit its purchasing power and allow it to more accurately purchase electricity to meet our needs, each half-hour of the day, as I understand things.
That should lead to a reduction in the price it pays at certain times in the day. That will then be passed on to the consumer in reduced billing. Someone talked about half-hour billings; I do not know if that is going to come about any time soon, but we will certainly know when it is cheaper to run certain types of electricity consumption. In order to make those changes, the customer has to be sure of the benefits or they are not going to change anything. They are going to carry on doing what they do at the time they prefer to do it. The chances of the lower-end pre-paid customer changing their habits, given the other pressures that there are in their life, are more remote than for those who perhaps have more time on their hands, can study these things and can make adjustments to habits that have been ingrained for some years, as they go through life, with family, children who move away and so on.
How will the Government force the energy companies to pass on savings that they will make to the customers? There was some talk in the energy committee in the other place that the Government will make sure that this happens, but how do they intend to enforce it? The Energy Minister in the other place quoted Richard Nixon, who said:
“If you’ve got them by the balls, their hearts and minds will follow”,—[Official Report, Commons, Smart Meters Bill Committee, 23/11/17; col. 73.]
but if you have not, they are not going to. That is about the size of it. I am not sure that the squeeze is happening quite where it needs to happen. Do the Government anticipate a change of heart among the energy companies towards their customers? That is unlikely. They are private businesses; they are in business to make a profit. That is their right and that is what they are set up to do. Their shareholders are their principal guides and they expect a return. It is hard to see where the customer fits into the squeeze there might be on the  price of electricity to suppliers. The Government need to think through how the customer benefits are to be realistically delivered.
Another thing concerning the change in our pattern of usage of night-time electricity for white goods is that there are increased risks that the Government should be aware of. Household fires are more likely with unsupervised white goods. Nuisance neighbour noise disputes will be on the increase as energy powers machines at night, particularly in places where people live one on top of another, in blocks of flats and so on. So the attractions of changing patterns of usage of electricity may not lead to the greenfield nirvana the Government seem to believe in.
One of the things that might have been possible—maybe the Minister will comment on this—was the Government taking responsibility for providing the customer with tariff information. Would it have been possible under SMETS 1? Is it possible under SMETS 2? SMETS 3 could possibly, if it has not been thought of before, inform customers about their best possible energy price sources. It is hard enough right now to know exactly where my best deal is, comparing tariffs within one supplier, let alone across a range of suppliers, with six major companies and a number of other minor providers. It is a complicated matter. Could the Government introduce this into the SMETS system and pass on the information to customers? That would be a real benefit and a real selling point for the meters being accepted by more customers.
I turn to the DCC. The Government intend the regime to take back control should the company go into administration. A special administration regime is to be established. The provocation for this lies somewhere between the recent failure of Carillion, an oversight in the original setting up of the DCC and doubts about the performance of Capita, the current DCC operator. If the DCC fails, the customer will foot the bill. The risk of failure is said to be extremely low. However, the impact would be high. Could the Government provide some analysis or report to reassure us that the DCC’s remote chances of failure are so unlikely that no one can see it happening? What happens if the DCC decides to walk away from the contract? Are there penalties? What are they? Might the Government be left high and dry, not by the failure of the company but by the company no longer wishing to provide the service because it does not believe it will meet the 2020 deadline, let alone those beyond it?
These are some of the questions. We support the Bill. It is deficient in some areas and these will be explored more as we go through Committee and Report, but I would be grateful if the Minister could answer some of the questions raised so far.

Lord Henley: My Lords, on the last or second to last point made by the noble Lord, Lord Lennie, he looked forward to a world with a SMETS 3 or 4 that might be able to assist a customer in finding a new supplier and direct him in that way. I think we are already there. I imagine that the noble Lord reads the Guardian more often than I do, but the Guardian of 11 March was talking about one company that is developing some sort of dongle that can be plugged into one’s meter and will automatically switch one to  the best supplier according to the programme one puts in. One can put in, “I want the greenest supplier” or “I want the cheapest supplier” and one could find oneself having a different supplier from month to month, possibly two or three times a year. The future is good. I refer the noble Lord to that article to see just what is happening out there and what smart meters, as they are at the moment, could possibly lead to.
I have to say that, listening to the debate, I felt that it was a fairly Eeyoreish performance, even by the standards of this House. The noble Baroness, Lady Featherstone, was politer—she referred to it as a masterclass in faint praise. The noble Baroness, Lady Maddock, was, as always, very kind to me: after making her Eeyoreish speech, along with her colleagues and all other noble Lords, she said that she expected something more optimistic from me, “Because the noble Lord always is very optimistic”. I think there is nothing wrong with being optimistic when one has technical developments that are going to bring great benefits to everyone. They are going to bring benefits to the consumer, as I made clear in my opening speech, but they will also bring benefits in terms of reducing our overall consumption and in many other ways.
Like the noble Baroness, Lady Featherstone, I was very amused by the picture of her noble friend Lord Teverson under the floorboards or somewhere—I am not quite sure where he was; it was rather a confusing picture, but he was in the rain with a torch. All I can do is refer the noble Lord to Hilaire Belloc’s “Lord Finchley”. The noble Lord will remember that Lord Finchley came to an untimely end because he tried to do these things himself. In future, the noble Lord can get someone else to look at these things, but smart meters will solve the problem for him.
Others, such as the noble Lord, Lord Whitty, and myself, took us back to 2008. I was very grateful to him for doing that and for saying that back in 2008 he was giving warnings, in his Cassandra-like way, and now he could say, “I told you so”. The great thing is that he can say “I told you so” to everyone here, in that the 2008 Act, as the noble Lord and others on the Benches opposite will remember, was passed under a Labour Government. The 2011 Act that I referred to was passed under the coalition Government. I think that we had a Liberal Democrat in both the business department and the energy department during that time, so their fingers must have touched this at some point. Now, in 2018 we have a Conservative Government, so perhaps, like Peter Simple’s Dr Heinz Kiosk, I can just say, “We are all guilty!”, if something has gone wrong. I think, from the degrees of optimism I have listened to in the course of the debate, that there is a general acceptance that smart meters are going to be able to do something that has not been available before and that, as I said, that will bring great advantages to us.
A very large number of questions of a fairly detailed sort have been raised and I will try to address a number of them. However, I think that what a debate of this sort also shows is that even a Bill such as this—a Bill that is broadly welcomed on all sides, that has been through pre-legislative scrutiny, that has had a very useful trip through another place since that pre-legislative scrutiny and that is now here—will benefit  from what your Lordships can do in Committee. I look forward to that Committee and hope that we can tease out just where the problems are so that I can give appropriate assurances on matters that are relevant to noble Lords and, if necessary, make amendments, but I do not think that that will be necessary. As the noble Lord, Lord Grantchester, put it, this is a largely technical Bill dealing with three small matters, but its title allows us to discuss the generality of smart meters, smart metering and how we get the rollout completed. I hope that in the course of this debate, Committee and further stages we can continue that process and provide the proper assurances.
This afternoon, I propose to answer a few of the questions to the best of my ability. I think it would be useful if I write another letter to all noble Lords who have taken part in this debate and place a copy in the Library, setting out a more detailed answer of the sort that one cannot properly give to some of the more detailed questions and very sensible suggestions made by my noble friend Lady Manzoor. I give that assurance that I will send that detailed response to all noble Lords.
In the meantime, I shall answer a few of the questions that have been asked. The first, and most important, is to give some sort of assurance that we believe that it is still possible, despite the numbers which the noble Lord, Lord Grantchester, quoted from Which?. The numbers probably appeared in the Daily Mail as well, for all I know—that was another publication that was mentioned. We believe that we will be able to get there in due course. The rollout to date has been growing. Around 400,000 smart meters are being installed every month. That has to get up to a bigger figure if we are going to get to the end in the three years that are available. I do not think that is representative of the next phase of the programme when most suppliers will be installing smart meters with greater numbers of installers and more types of customers across Britain. We will certainly continue to collect data—this was something that the noble Baroness, Lady Maddock, asked about—on the rollout, getting independent, official, quarterly statistics on progress by the large suppliers, and we will make sure that they are published quarterly, as I think they have been since September 2013. In addition, a summary of the annual rollout progress for the calendar year is published every March, so we should have that in due course. I do not know whether it will be before Committee, as no one has yet given me a suggested date for the next stage of the Bill.

Lord Teverson: As I said, I think it is impossible to get to that. Can I just be clear about the commitment? It is to offer everybody a smart meter. Are the Government clear with the suppliers about what “offer” means and that it is not just an email saying, “Do you want a smart meter”? Are we clear about the target? Not everybody wants one. Is that a potential get-out clause in this target?

Lord Henley: The noble Lord knows that we are not going down the route of saying that everyone will have one, but we hope everyone will see the benefits of them and that everyone will be offered one, and I hope that offer will be more than just the email that the noble Lord suggests. It is difficult to persuade people to change. Some months ago we discussed the ease with  which one can change one’s electricity supplier. However, because of inertia, few people do. The easier that it becomes and the more benefits that there are, the more people will switch supplier. The same applies to smart meters: people will adopt them as they see the benefit. We shall continue to push suppliers to do what they can, because of the benefits. That is not only those benefits to consumers that we all recognise, but those to the country through reducing our overall electricity consumption by evening it out and those other benefits identified.

Lord Grantchester: I thank the Minister for giving way. It is the responsibility of Ofgem to report on the companies’ taking all reasonable steps to offer consumers a smart meter.

Lord Henley: The noble Lord is absolutely correct. I apologise for not making that clear. There will be information available from Ofgem.
On rollout, I agree with points made that there is more that we can do to engage with customers in moving to smart metering. This is important and we shall certainly do more. As noble Lords will know, we have required the establishment of Smart Energy GB. This is an independent not-for-profit organisation leading the centralised programme to raise national awareness alongside activities to drive behaviour change and help consumers to benefit from smart working. The situation is changing. I think that the noble Baroness, Lady Maddock, quoted figures about satisfaction rates, but on awareness of smart metering, this has increased from some 40% to over 80% in three years and has driven demand for millions. Research shows—I believe that this is a figure that the noble Baroness quoted—that some 80% of consumers who have smart meters would recommend them to friends and family.
The question of safeguards, safety of data and related issues, is a concern of my noble friend Lady Manzoor, the noble Lord, Lord Whitty, the noble Baroness, Lady Maddock, and others and it is something to which we shall come back in due course. National smart meter infrastructure has been developed from the outset in consultation with experts from industry and government including the National Cyber Security Centre, which is part of GCHQ. The smart meter security model establishes physical, regulatory and operational security controls backed by independent security assurance arrangements. For instance, critical commands will only be accepted by the smart meter if they are issued by the responsible energy supplier and authenticated through strong encryption. Moreover, they have to be countersigned independently by the DCC.
The Government have also put in place a strict data access framework that protects consumers’ privacy. This is important. I think that this was at the heart of some remarks of the noble Baroness, Lady Featherstone. Households will have control over who can access their detailed energy consumption data and for what purposes, except where this is required for regulated purposes—that includes billing.
I am beginning to run out of time. I shall write in greater detail. The final point that I shall address now is that of the noble Lord, Lord Broers. He highlighted  the importance of more work to ensure that a promise of a connected home was delivered. The noble Lord will be aware of a joint BEIS-Ofgem smart systems and flexibility plan that was published in July 2017. That reaffirmed that smart meters are the foundation of a smart meter energy system. It included a commitment to work with industry to develop standards for smart appliances that will allow consumers to provide flexibility and benefit from demand-side response.
I appreciate that I was asked many more questions and that there is much detail that will need to be gone into. What I hope to do is to write a letter as soon as possible to all those who took part in the debate detailing all those points that need to be covered. The important point is that we can then sit down—or stand up—and discuss these matters in detail in Committee, make sure we have the Bill right when we send it back to the Commons and make sure that we can look forward to broad, sunlit, happy uplands. As I said, I will continue to be the optimist rather than one of the series of Eeyores I have heard speaking on this occasion. I look forward to a bright future for smart meters, whether that is SMETS 1, SMETS 2 or even SMETS 3 as mentioned by the noble Lord, Lord Lennie.
Bill read a second time and committed to a Grand Committee.

Northern Ireland Finances
 - Statement

Lord Duncan of Springbank: My Lords, with leave of the House, I will now repeat a Statement made by my right honourable friend the Secretary of State for Northern Ireland in the other place. The Statement is as follows:
“With permission, I would like to make a Statement about Northern Ireland finances. Last week, I laid a Written Statement in which I explained that the pressures on public services meant that it was imperative for the Government to take steps to provide clarity to enable planning in Northern Ireland for 2018-19.
With great reluctance, and in spite of my strong preference for a new Executive to set a budget, I set out in this Statement the resource and capital allocations which I considered to be the most balanced and appropriate settlement for Northern Ireland departments. I did this following intensive engagement with the Northern Ireland Civil Service—NICS—and consultation with all of the main Northern Ireland parties.
In the continued absence of an Executive, I have an obligation to take these and any other measures that are necessary to keep Northern Ireland functioning. But I will only take such measures where they are essential and limited in nature, and are part of a clear and consistent approach by the Government. This approach is based on a number of principles. First, we remain steadfast in our commitment to the Belfast agreement. All that we do will be with the purpose of protecting and fulfilling the agreement. But, secondly, we will take those decisions which are necessary to provide good governance and political stability for Northern Ireland, consistent always with restoring the Executive and local decision-making at the earliest  possible opportunity. Thirdly, we will continue to implement our obligations under the agreement and its successors where possible, always working for the good of the community as a whole. Finally, we will continue to work with all the Northern Ireland parties, and with the Irish Government as appropriate, to remove the barriers to restoring the Executive and a fully functioning Assembly.
The principles at the core of the agreement and the political institutions it establishes continue to have our full and unreserved support. That means that we will uphold the principle of consent, consistent with this Government’s support for Northern Ireland’s place within the union and with maintaining the constitutional integrity of the United Kingdom. We believe in devolution and the imperative for local decision-making by local politicians. We support power-sharing on a cross-community basis, based on mutual respect and recognition. We will continue to support and facilitate north/south co-operation, including as we leave the EU, while always preserving the economic integrity of the United Kingdom. We will continue to work closely with the Irish Government in full accordance with the three-stranded approach. We will continue to act fairly and govern in the interests of all parts of the community in Northern Ireland.
The necessary steps, which I have taken and will continue to take, are consistent with all of these commitments. In addition to the steps I set out last week, there are several associated measures required to further secure public finances which I will be taking forward. As well as cutting costs, securing efficiencies and beginning to take the steps to transform public services, it is right to look at how income can be increased to protect the public services on which the people of Northern Ireland depend. I will therefore introduce legislation to set a regional rate, which will increase domestic rates by 3% above inflation. This will make an important contribution to sustainable finances in the long run, with the additional funding addressing urgent pressures in health and education. I also intend to act to extend the cost-capping of the current renewable heat incentive scheme in Northern Ireland, which the Assembly had put in place over a year ago. It would not be acceptable to put finances at risk by simply allowing that cap to lapse. I therefore propose to extend it for a further year from 1 April, the minimal possible step to protect the public purse. I will also confirm the final spending totals for the Northern Ireland departments for the 2017-18 financial year in legislation to set supplementary estimates.
I also believe that the time is right to address the ongoing public concern about MLA pay in the absence of a functioning Assembly. I thank Trevor Reaney, who was instructed by my predecessor to produce an independent view and recommended a 27.5% reduction to MLA pay. I will seek to introduce legislation to take a power to vary MLA pay. Further to that, I am minded to reduce pay in line with the Reaney review recommendation, but I would welcome full and final representations from the Northern Ireland parties before I make a final decision.
These measures—which I take reluctantly, but which are necessary in the absence of a functioning Executive and Assembly—will deliver the stability and the decisions  to enable forward planning for the financial year ahead. But I am clear that they cannot provide the local input and fundamental decisions which are needed to secure a more sustainable future for Northern Ireland. My powers as Secretary of State for Northern Ireland are limited. The scope of this House to pass legislation on the devolved issues which matter for Northern Ireland is limited. This rightly reflects the devolution settlement which is in place and to which this Government are committed. But it does mean that, in the continuing absence of an Executive, there are fundamental decisions in Northern Ireland which cannot be taken, scrutinised and implemented as they should be.
This has been the situation for 14 months already and, in the continued absence of an Executive, it would be irresponsible for us not to consider how we might provide for different arrangements until such time as the devolved institutions are back up and running. Alongside this I also continue to keep under review my statutory obligation to call an Assembly election.
I would welcome the views and proposals of the Northern Ireland parties and others on how such arrangements—providing for local decision-making and scrutiny on a cross-community basis—might be achieved in the continued absence of an Executive; and how any such arrangements might work alongside the other institutions of the agreement. Let me be clear that this in no way affects my commitment to the Belfast agreement, nor my commitment to continue to work to remove the barriers to the restoration of devolution. As the 20th anniversary of the Belfast agreement approaches, I am clearer than ever that Northern Ireland needs strong political leadership from a locally elected and accountable devolved Government. That remains my firm goal. I commend this Statement to the House”.

Lord Murphy of Torfaen: My Lords, I thank the Minister for the Statement, and agree with him on the need to restore the devolved institutions in Northern Ireland, especially as it is about four weeks away from the 20th anniversary of the signing of the Good Friday agreement. The commitment of the Government to the underlying principles of that agreement is very much to be welcomed.
I understand the need to set a budget and agree that it is wholly inadequate for civil servants, however good—and, indeed, they are all good—to decide the spending priorities in Northern Ireland. Can the Minister tell us a little bit more about the consultation process that has occurred with the political parties and others in Northern Ireland, specifically on the regional rate and on the allocation of resources to the different departments in Northern Ireland? In particular, will he tell us about the consultation on the Bengoa proposals on the health service in Northern Ireland, and where we are on that important matter?
The Minister raised the difficult—perhaps even controversial—issue of the salaries of Members of the Legislative Assembly. Does he envisage a time limit on the consultation with the political parties in Northern Ireland? During the course of his Statement, he mentioned that there would be a need for legislation to implement  parts of the budget and to vary the salaries of the MLAs. Can he give the House an indication of when such legislation might be before us? Lastly, does he accept that this budget-setting exercise is not a road to direct rule, and that robust and meaningful talks on setting up the institutions in Northern Ireland will begin very shortly?

Baroness Suttie: My Lords, I too thank the Minister for repeating yesterday’s Statement. However, there is a slightly wearying sense of déjà vu about it, and one cannot help but wonder at what point these sticking-plaster solutions will cease to be viable. Clearly, however, a return to direct rule is something that we all wish to avoid, and we continue to believe firmly that power-sharing devolution is vital to local democracy and representative decision-making. In that regard, the Secretary of State’s reassertion of the Government’s commitment to both the Good Friday Belfast agreement and to re-establishing functioning devolution in Northern Ireland is very much to be welcomed.
We on these Benches recognise the pressures on public services, meaning that these measures are essential to ensuring that the people of Northern Ireland do not suffer in the provision of vital services, and to ensuring that education and healthcare services can function and that peace and stability can be maintained by the PSNI. The Police Federation has warned that the 0.3% increase in the Ministry of Justice budget will inflict real damage on the PSNI. The PSNI is currently spending £125,000 a day on overtime to fill gaps in its workforce capacity. Can the Minister confirm that ensuring that the PSNI is able to carry out its work effectively remains a key priority for the Government? The Civil Service in Northern Ireland, as the noble Lord, Lord Murphy, has said, continues to do sterling service in keeping the system functioning but, without the direct input of Northern Ireland Ministers, much-needed long-term strategic planning for Northern Ireland becomes increasingly difficult.
In the Statement on 20 February, in reply to my question about the introduction of an independent mediator to chair the all-party talks and to attempt to bring new impetus to the drive to re-establish an Executive in Northern Ireland, the Minister said nothing was ruled out. Can he give an update on whether that is still an option that is being actively considered? Can he also outline what other initiatives are being actively considered to break the current impasse in the talks?
I note the ongoing discussions on MLA pay and the Reaney review. What representations has the Secretary of State had on this issue from political parties in Northern Ireland? In the Statement the Secretary of State says,
“it would be irresponsible for us not to consider how we might provide for different arrangements until such time as the devolved institutions are back up and running”.
Can the Minister confirm that this would involve options allowing Members of the Assembly to play an active role in ensuring that Northern Ireland’s voice is heard clearly in the Brexit negotiations?

Lord Duncan of Springbank: I thank the noble Lord and the noble Baroness for their contributions. It is important for us to stress again at the outset that we  are all united in our belief that the Belfast agreement itself must be the foundation upon which we build all our progress. I think we are all of the same view. I am aware that we are experiencing a recurring sense of déjà vu—we certainly are with some of my Statements—but it is our ambition to secure the reformation of a functional and sustainable Executive in Northern Ireland.
I think it is important for me to answer the questions directly as they have been raised. On the question from the noble Lord, Lord Murphy, on how we came to the figures within the overall budget, he is right to stress that we have put a great deal of pressure and stress upon the Northern Ireland Civil Service, but it has been very important in determining departmental needs. That has been the first building block. The second is that, as he will be aware, a budget briefing was published just before Christmas. The Northern Ireland Office has reflected very carefully upon the responses that were received in the light of that briefing from the main parties of Northern Ireland, and they have been borne in mind. In addition, my noble friend the Secretary of State for Northern Ireland has undertaken a fairly extensive engagement with individual stakeholders—teachers, doctors, nurses, and police officers—to understand the challenges faced on the ground. It is important to reflect on how important that is.
The figures we are talking about are substantial, and I believe they will make a substantial difference. We have £80 million of support for immediate health and education pressures, £30 million to support programmes to address issues of mental health and severe deprivation, £100 million for ongoing work to transform the health service in line with broad-based consensus fostered by the Bengoa report, and a £200 million allocation in capital spending for key infrastructure projects.
That gives a sense of the scale of the investment. There is also a recognition, as we build that budget—we have spoken of this before—of trying to plot a trajectory from the point at which the previous Executive fell, and then trying to plot across. We have had to take that as a basis and build on it, and that is why £4 million has been allocated to prepare the ground for transformation and £100 million set out for health transformation, recognising again that these are part of the critical elements that are identified by departmental heads in the Civil Service and the main political parties.
On the question of MLA pay, I stress again that my right honourable friend the Secretary of State for Northern Ireland would like the views of others to make sure that in her determination and deliberation she can deliver exactly what is required. I am mindful of the point made by the noble Baroness, Lady Suttie, about the potential roles for the MLAs themselves—even without being part of a functional Executive. As I said in a previous Statement on a not dissimilar topic, we have not ruled anything out, and would welcome the thoughts of the noble Baroness, Lady Suttie on that point, to help us in our thinking. As for when we can anticipate the legislation, if I may be slightly non-specific, we will bring forward necessary legislation imminently to deliver against the budget as we have set it out.
The noble Baroness, Lady Suttie, raised the PSNI. Again, I can be very clear and specific and say that it remains a key priority of the Government, and we will do all we can to preserve that and deliver against it.
As to the question of an independent mediator, noble Lords will be aware that we are in an interregnum—the talks have ended but are not over—and that period of reflection has given all of us an opportunity to work out what additional aspects of engagement should be brought to the table. I am becoming a little repetitive, but I will say again that we are ruling nothing out. Anything we can do to take this forward must form part of that.
We also hope that the parties involved in the talks will take advantage of this period to reflect not just on what they wish to deliver for the parties themselves but for the wider communities they represent. That will be essential. If the talks are to deliver an outcome that is sustainable, meaningful and restores local government to Northern Ireland, we need to be able to depend on them. There are too many important issues unfolding right now, not just in our House, but affecting everyone in Northern Ireland. It is time that we heard those voices in an Executive and an Assembly.

Lord Maginnis of Drumglass: My Lords, I am grateful to the Minister for repeating the Statement, and particularly grateful for the hands-on methodology that he has adopted since he became Northern Ireland spokesman in this House. It is refreshing.
I have two issues. Is the Secretary of State aware of the barely disguised efforts of Taoiseach Varadkar and foreign spokesman Coveney to interfere directly in the internal affairs of Northern Ireland? This callous activity goes as far as encouraging Sinn Fein not to progress the current talks towards a solution or the implementation of an effective power-sharing Executive. I furnished the Minister with that report from the Irish Times previously.
On the need for an urgent interim methodology, if, when an aspect of direct rule is required—and many of us think that it is required—I would press that a considerable number of those who achieved the Belfast agreement sit in this House. There are others here who have, when the Executive was functioning, been effective and experienced there.
I suggest, having been ignored—I might even say boycotted—by previous Secretaries of State, that the current Secretary of State, Secretary Bradley, will not allow herself to be intimidated but will look to those who have years upon years of experience, from 1994 until now. They have 24 years’ experience and may just be able to give some common-sense guidance.

Lord Duncan of Springbank: I thank the noble Lord, Lord Maginnis, very much for his trenchant intervention. The noble Lord is right to point out that, sitting in your Lordships’ House are a number of architects of the Belfast agreement, and that the knowledge contained within these four walls should be drawn on now as we begin to enter this phase of maximum danger, when we need to be able to deliver an outcome that works for the people of Northern Ireland.
I am reminded again of the remarks by the noble Lord, Lord Empey, on these issues the first time I stood here at the Dispatch Box. He said that it is very  easy to walk down the steps of Stormont; it is very hard to walk back up. Of course, he was alluding to the challenge of direct rule.
We hope to—and we will do all we can to—bring a rapprochement, by whatever method we can, to the parties who are needful in delivering this particular serious outcome. In addition, I note that the noble Lord, Lord Maginnis, passed me information that I have taken away, and we will certainly look at that in greater detail. I may come back to that on a later occasion.

Lord Reid of Cardowan: My Lords, I welcome the very definite commitment in this Statement again to the Belfast Agreement and to the principles that underpin it. It is worth reiterating that at every opportunity in view of some of the voices off, which I do not think have been particularly helpful. I ask the Minister to very much bear that in mind when it comes to the seemingly innocuous phrase:
“It would be irresponsible for us not to consider how we might provide for different arrangements until such times as the Executive is back”.
I am not opposed, nor would any Member of this House be opposed, to discussing how to move things forward, but I think, with the benefit of hindsight—some people, such as the noble Lord, Lord Empey, might say “with foresight”—that some of the changes we have made from time to time to the mechanics of the operations of the Executive have not always been conducive to encouraging the coherence and the spirit of the Good Friday agreement. There are risks and dangers in that innocuous phrase.

Lord Duncan of Springbank: I thank the noble Lord, Lord Reid, very much for again bringing his knowledge to the discussion. He is absolutely right to speak of the voices off and the noises off. We have to turn them off; it is unhelpful right now. We need to focus on what we believe we require, which is securing again the Belfast agreement at the heart of the restored institutions in Northern Ireland. I am happy to emphasise that again whenever I am called on to do so.
Again, it is telling that the noble Lord is willing to reflect on his own time in office. It is rather like lifting the bonnet of a car. I have no idea what happens under there. You start tinkering at your own peril. It is amazing what harm you can do when you have less experience of what is under there. That is not to say that we need not be careful about how we move forward. None the less, we should be progressive. The reason my right honourable friend was very clear in her Statement is that we need to recognise that, at this time of challenge, we must have a means of securing those voices in the essential and ongoing discussions. Noble Lords will be aware that in the next few days we shall return to a number of the devolved elements of the withdrawal Bill. When we talk about these essential issues here in our House, I am again minded of the deafening silence from the Executive, which does not sit, and the Assembly, which cannot speak. I am mindful of the warning from the noble Lord but at this moment we need to find ways to secure progress. As I have said, I do not believe we can take anything off the table.

Lord Bew: My Lords, I thank the Minister for repeating the Statement and thank him for the trenchant defence he has once again given this afternoon of the 1998 Belfast agreement. It is vital that he does so and that others recognise and listen to what he has to say.
I wish to press him on a point of detail in the Statement. I declare an interest as a former teacher in the two universities in Northern Ireland. The Secretary of State’s Written Statement of 8 March says that there is an increase in real terms in the education budget. However, on the current figures, there is no way of working out what is happening in that regard in the higher education sector as against the rest of the education sector. I do not wish to be churlish about this because this budget is tremendously important. The £10.4 billion is crucial to Northern Ireland and is a clear benefit of the union to the people of Northern Ireland. Tomorrow we will hear a lot about the European Union. I think its contribution is 1% of that, and that quite a lot of that 1% is recycled United Kingdom money.
I am grateful for this budget but we need a little more clarity on it, if possible. The Secretary of State’s Statement says that later in the year there will be more detail on it. I urge against the idea that giving us that kind of detail is a move towards what is now called in the lexicon “full-fat” direct rule. I think this could be done without raising these theoretical or ideological problems. I wish to press the Minister on this as there is great concern about it. For example, as regards higher education, there are many rumours in Northern Ireland that the Government are setting their face against postgraduate funding in the universities in Northern Ireland and envisage introducing major changes there. We cannot tell anything about that from the Secretary of State’s Written Statement. The noble Lord, Lord Murphy, also referred to issues on which the Government could give us a little more information. I hope they will do so later in the year.

Lord Duncan of Springbank: I thank the noble Lord, Lord Bew, very much for his intervention. I am trying to avoid full-fat anything at the moment and am looking for the semi-skimmed approach as far as I can. The noble Lord made a legitimate and appropriate request. I believe we will be able to furnish him with the appropriate information very soon. It is absolutely essential that the people of Northern Ireland are able to see how the money is crafted and allocated. I would much prefer to be wholly scrutinised by an Executive founded and operating sustainably in Belfast but, in the absence of that, I believe your Lordships’ House also needs to be able to scrutinise this issue adequately. I believe information will imminently be provided that will allow us to do that very thing.

Lord Browne of Belmont: My Lords, I welcome the budget Statement. It enables the hard-pressed public services in Northern Ireland to continue to operate and gives the Stormont departments certainty for the next financial year. I particularly welcome the £410 million extra new money for Northern Ireland as part of the confidence and supply agreement with the Democratic Unionist Party. It will provide much-needed support for health, education and infrastructure and will benefit all the communities right across the Province.
While I welcome the Secretary of State’s willingness to look at arrangements to provide for local decision-making and scrutiny on a cross-community basis, does the Minister agree that it is vital that the Government intensify their efforts to restore devolved government to Northern Ireland so that decisions can be made by locally elected and locally accountable Ministers?

Lord Duncan of Springbank: I thank the noble Lord for his intervention. The £410 million will do good across the communities. I believe that it will be spent wisely and will address a number of the challenges that have been experienced in Northern Ireland, which will be good to see. However, I want to be very clear that we need to be in a situation where these matters are addressed at a local level—not just in terms of the allocation but, more importantly, in terms of scrutiny. There must be full transparency and full confidence in the manner in which this money is constructed and allocated, and spending overseen. We must have great confidence in that; it will go some way to restoring confidence in governance in Northern Ireland, not just in what we are trying to do to bring about a stable and sustainable Executive.

Baroness Blood: My Lords, I will ask the Minister a brief question and a direct one: We welcome the extra money going into Northern Ireland, especially around health and education, but who will make the decision about where that money will go? Last year, in James Brokenshire’s Statement, £50 million of the confidence and supply money was given to mental health. To this day, not one penny of that £50 million has been spent, simply because there is no local Minister to sign it off. Will we be tied by the same regulations, for instance around the infrastructure money? Who will make up their mind who will get the money and where it will go? Will it come direct from Westminster? What is the position?

Lord Duncan of Springbank: I thank the noble Baroness for her intervention. Money allocated and unspent does not do any good. It is as simple as that. We must be in a position to ensure that the money allocated is spent. We believe this is best achieved through the departmental structure that exists in Northern Ireland. The determination of the overall scale of spend has already been achieved through direct consultation with civil servants in Northern Ireland. They will be responsible also for the delivery of that money into the various, clearly set out projects. It will be necessary not only for the money to be spent but for it to be transparent and clear. The people of Northern Ireland must be able to see that and recognise what good the money is doing to meet challenges that are now well established and well recognised. The noble Baroness will be aware of several of these challenges in the areas of health and education. But I stress again that the money and responsibility will rest with the departments. We will ensure that it is spent in a transparent manner that will give confidence to those who see the money and, hopefully, see the good it will achieve.

Lord Empey: My Lords, surely the Minister accepts that there is a need to do things differently. We have come to a series of Statements of this nature over  the last 14 months and there is little or no prospect of any immediate resumption of devolution. In fact, people are now talking in terms of “post Brexit”. Members will know the effect of a vacuum in Northern Ireland and who is likely to fill that vacuum—and it is not going to be the good guys. The reality is that the principal parties of government—whatever the ebb and flow of the agreement that never was—have run the institutions into the ground. That is the fact. Mention has been made of confidence and supply money. Will the Minister tell us when this will be approved by Parliament? At the moment it is effectively an undated cheque, and the departments need to know when they will be able to take it into account.
A second point raised concerned the RHI cap. While that catastrophe has yet to completely unfold, a lot of people out there legitimately took the Government of Northern Ireland at their word and got these boilers installed, and some are now facing financial ruin. Their bankers were encouraged by ministerial letters from Mrs Foster to lend them money to get these boilers, and now the premiums they were getting on the original business plan have been slashed. So those people are in severe difficulty and I ask the Minister to bear that in mind.
I turn to the alternative arrangements, which I think we were all interested in. I thank the noble Lord, Lord Reid of Cardowan, who I think is the first senior politician even to hint that some tweaks and changes made over the years have not necessarily worked out as planned. Can the Minister tell us exactly to what extent the Government have an open mind on these matters? There are a lot of ideas around the House that could be fashioned and used, and I believe we are willing and able to help in working towards a constructive solution—but I repeat that a vacuum is the worst possible situation. It leaves the pitch open for players to come back on when we thought we had them suppressed. This is a golden opportunity for these people and we should all stand up against them.

Lord Duncan of Springbank: The noble Lord, Lord Empey, has made three useful points. I note again that the noble Lord, Lord Maginnis, spoke about the fact that there are a number of architects of the Belfast agreement in your Lordships’ House—although in some respects they are not architects but mechanics. We have not built an edifice that just has to stand; it is an engine that has to work.
In response to the third point raised by the noble Lord, Lord Empey, we have an open mind and we need to think afresh about anything that can help us to move this matter forward. Of course, we recognise that we are facilitators of the dialogue. We cannot insist on or thrust forward what we wish to see happen—but we hope that, by providing a safe space in which to negotiate, we can bring it about.
In response to the noble Lord’s first question, the confidence and supply component of the budget will be dealt with as part of the overall allocation. As I said in response to the noble Lord, Lord Murphy, that is imminent—so I hope we will be in a position to discuss that seriously very soon.
With regard to the wider question of boilers and the RHI scheme, I stress again that my right honourable  friend the Secretary of State for Northern Ireland is very aware of the challenges that it represents and will be very careful in taking the matter forward.

Viscount Brookeborough: My Lords, perhaps I may ask a question about the policing or Department of Justice budget, which may be £36 million. How much of that will go to front-line policing, bearing in mind what the noble Lord, Lord Empey, said about the various problems with filling a void? There is another point. Policing is not just about crime that is being committed today and nor is it just about terrorism; it affects every community and every person. The fear of crime is a very big issue—but I do not mean simply that individuals are afraid of crime. It is the Government’s responsibility to protect the community. Without a doubt, the level of resources for policing has gone down and that adds to the feeling of hopelessness in the community: “We have not got an Executive—and sometimes local policing is not very effective”. We used to have a lot of community policing, which was all part of the Patten proposals—I declare an interest in that I was on the Northern Ireland Policing Board at the time—but we really do not have that now. We have mobile police stations, but that is not community policing. It is not keeping your finger on everything and it does not reassure the population. The lack of certainty from a government point of view has a very big effect on people’s outlook.

Lord Duncan of Springbank: The noble Viscount, Lord Brookeborough, makes an almost philosophical point about the purpose of a police force and about the fear of crime. In many respects, the best possible police force is the one that you never see because you never need to, as it works so effectively that you are safe, secure and sound without ever seeing any intervention. I stress again that my right honourable friend the Secretary of State for Northern Ireland is very aware of this challenge. I do not know the answer to the noble Viscount’s specific question; if he will forgive me, I will write to him setting out the proportion of the police budget that is for front-line services.

Lord Kilclooney: My Lords—

Viscount Younger of Leckie: My Lords, I regret that the time for Back-Bench questions is over.

Syria: Protection of Civilians in Afrin
 - Statement

Lord Bates: My Lords, with the leave of the House, I will repeat a Statement given by my right honourable friend Alistair Burt in the House of Commons yesterday. The Statement is as follows:
“I would like to update the House on the situation in Afrin. We are closely following developments in Afrin and wider north-western Syria. Over the weekend, Turkish and affiliated forces have continued their territorial gains and are now approaching the town of Afrin itself. We are concerned about recent reports of rising civilian casualties.
The Government have called for de-escalation and the protection of civilians, while recognising Turkey’s legitimate interest in the security of its borders. We will continue to push for a reduction in violence and for consideration of the humanitarian needs of the population in the affected areas. The Prime Minister has raised the need for protection of civilians and proper humanitarian access with the President of Turkey and the Foreign Secretary has done so with the Foreign Minister. The Turkish Government have assured the Foreign and Commonwealth Office that they are working to prevent civilian casualties.
UK-funded partners have been delivering humanitarian assistance in Afrin, including health and protection services. Some of these activities have been suspended due to the current hostilities, but our partners continue to meet needs where they are able and are pre-positioning supplies to help meet the needs of those fleeing the area. This includes health supplies, blankets and food. UNICEF, other UN organisations and the World Health Organization have temporarily suspended all activities in Afrin due to the recent military action.
As the Foreign Secretary said in his Statement of 26 February, we are concerned about the humanitarian consequences of the operation in Afrin. We urge all parties to respect the law of distinction between civilian and military targets, facilitate access for life-saving humanitarian aid, and to allow freedom of movement for those caught up in the violence, in accordance with international humanitarian law.
The Syria conflict will soon be in its eighth year. The UK continues to make every effort to achieve our goals in Syria: of defeating the scourge of Daesh and of achieving a political settlement that ends the suffering and provides stability for all Syrians and the wider region. There ultimately needs to be a transition to a new, inclusive, non-sectarian Government that can protect the rights of all Syrians, unite the country and end the conflict. But we are pragmatic about how that might take place. Syria’s future must be for Syrians to decide.
As the second largest bilateral humanitarian donor in Syria since 2011, the UK is at the forefront of the humanitarian response and is providing life-saving support to millions of people. Since 2012, across Syria and the region, UK support has delivered 26 million food rations, 9.8 million relief packages, 8 million vaccines and 10 million medical consultations. Last year alone we provided clean water to over 5 million people, and contributed to the formal primary and secondary education of over 700,000 children affected by the crisis.
However, ultimately the only way to end the conflict is through a negotiated political settlement. The Foreign Secretary has emphasised, including to his Turkish counterpart, the importance of a political solution and the defeat of Daesh. This must continue to be at the forefront of international efforts and we are concerned about the possibility of the diversion of Kurdish fighters from this crucial fight. We remain committed to working closely with Turkey and other allies to find solutions in Syria that provide stability and bring to an end this terrible conflict”.
I commend this Statement to the House.

Lord Collins of Highbury: My Lords, I thank the Minister for repeating the Statement.
As we have seen over the weekend, the Kurdish community across the United Kingdom is watching, and it needs to be reassured that the United Kingdom is doing everything it can to try to alleviate the terrible humanitarian crisis that is developing. Time and again, those fighting in Syria are consistently failing to take precautions that protect civilians. As the Secretary-General of the United Nations said to the Security Council on 12 March:
“Syria is bleeding inside and out. There should be only one agenda for all of us: to end the suffering of the Syrian people and find a political solution to the conflict”.
Alistair Burt, the Minister of State for the Middle East, said the best opportunity for peace and security is,
“to support the Geneva process … and to work as hard as we are diplomatically to get the parties to find a better answer to the conflict”.—[Official Report, Commons, 12/3/18; col. 677.]
What is the Government’s latest assessment of the Geneva process? Does the Minister believe that there will be a political solution and that Daesh will be defeated when Turkey sees its priority as stopping the Kurds rather than getting a political solution? The Statement says that the protection of civilians must be balanced with,
“Turkey’s legitimate interest in the security of its borders”.
We must be clear that the incursion is neither legitimate nor justified and has no basis in international law. According to reports—and as the Minister himself said—Turkish forces are right now advancing on Afrin, and there are real concerns that when they enter there will be widespread atrocities as they seek to root out those they call terrorists.
The Government said that although we cannot get close to Afrin, the UK is doing its best to make sure that United Nations agencies and others active in the area have supplies available if people are able to leave. Will the Minister update us on the efforts to work with our allies, especially the EU, to enable people to leave? In addition, can we do more than simply urge all parties to respect the law of distinction between civilian and military targets? Surely one way is to make it clear that no one can act with impunity in breach of international humanitarian law. Human rights monitors can act as one of the greatest deterrents against civilian atrocities and can ensure that perpetrators of abuses are held to account.
Alistair Burt said that the Government intend to hold the Turkish Government to account for the representations they have made about preventing civilian casualties. What specific steps will the Government take to do that—that is, just how do we hold them to account? The Government say Afrin is an area where the UK is not present on the ground, from where it is difficult to get information out, and where UN workers are not able to operate. Therefore, what steps are the Government taking to achieve a more unified multilateral approach with our EU partners in order to urge Turkey to allow access for humanitarian aid and independent monitors? Finally, what steps are the Government  taking to quickly restore full humanitarian access to Afrin so that the UK and other partners can get aid in and ultimately save lives?

Baroness Sheehan: My Lords, I too thank the Minister for repeating the Statement. The UN Security Council Resolution 2401, announced on 24 February, was jointly negotiated with the Russians and was greeted with relief as it allowed for a ceasefire in order to deploy humanitarian aid convoys to all besieged areas, including eastern Ghouta. However, it was apparent straight away that the Syrian regime’s concession of a five-hour ceasefire window was a mockery of any so-called humanitarian gesture, as it allowed scant time for supplies to be loaded on to lorries, the necessary permissions to be sought and put into place, and for the aid to be delivered where it was needed. On top of that, medical supplies were removed from lorries, leaving civilians without necessary and essential supplies. This has been the appalling situation since 25 February. Finally, yesterday, the US Permanent Representative to the UN, Nikki Haley, made a statement condemning the action of the regime, adding that the US could be forced to act unilaterally. I am puzzled as to the timing of today’s Statement to both Houses. Is it in response to the US’s statement yesterday, and if so, do the Government share the view that the ceasefire was a failure, and does it imply our acquiescence in the US’s sabre rattling? Can the Minister at the very least articulate the Government’s view of Nikki Haley’s threat to take action?
We are all shocked by the situation in Afrin. Reports of the shelling of villages and residential areas are deeply troubling. Violence in the Afrin region escalated after the Turkish Government announced on 20 January the start of a military offensive codenamed “Olive Branch”, which in my view is a macabre choice of name. Between 22 January and 21 February the Kurdish Red Crescent reported 93 civilians killed, including 25 children, in attacks by the Turkish military. A further 313 civilians were wounded, including 51 children. Meanwhile, Kurdish YPG forces shelling in Azaz have allegedly killed four people.
The use of artillery and other imprecise explosive weapons in civilian areas is prohibited by international humanitarian law and all parties should cease such attacks immediately. I hope that the Government have conveyed that message to Turkey in the strongest possible terms. The Kurds have been key allies in our fight against Daesh and I think that all noble Lords will be appalled by the attacks that they are now facing. The Minister will be aware of UN Security Council Resolution 2254, in 2015, which states that the only sustainable solution to the current crisis in Syria is through an inclusive and Syrian-led political process that meets the legitimate aspirations of the Syrian people. Does the Minister therefore agree that such a process must involve Kurds in Syria? Finally, the Kurdish region has already accepted around 2 million refugees and internally displaced people. What assessment have Her Majesty’s Government made of the impact that the Turkish military operation will have on this group?

Lord Bates: I thank the noble Lord and the noble Baroness for their questions. Let me start with the Geneva peace process, which has been referred to, as  well as UN Security Council Resolution 2254, to which the noble Baroness, Lady Sheehan, referred. It called for inclusive talks which we believe offer the only possible long-term solution. Staffan de Mistura, the UN Secretary-General’s Special Envoy for Syria, is working hard and effectively against a background of incredible difficulties and complexities to try to get those talks started again. There have been a number of rounds in Geneva and there may be future rounds in Vienna, but in particular as a result of the Astana and the Sochi processes coming to an end, this is in effect the only show in town. We have to make sure that all of the parties to the conflict become parties to the peace by urging them to progress through the process.
The noble Baroness referred to the statements made yesterday by the US Permanent Representative to the United Nations, and of course she will be aware that a change of personnel has been announced, with Secretary of State Rex Tillerson being replaced by Mike Pompeo. We now wait to find out whether that will bring about any change in the dynamic here. Both the noble Lord and the noble Baroness were right to point out that this is a global crisis and we need to work multilaterally. We have to be quite honest in these situations about the limitations we face as regards acting independently on the ground. We must work with our EU colleagues, our NATO allies and, crucially in this context, with the UN Security Council.
The noble Lord, Lord Collins, asked what we are doing at the Security Council. Of course, UNSC Resolution 2401, also referred to by the noble Baroness, Lady Sheehan, is for a 30-day ceasefire period from 7 March. We have not given up hope of that and we still want to hold the parties to it. It was agreed so that humanitarian aid could reach millions of people who are in desperate need. In these situations, it is very easy to be frustrated at being powerless in the face of such incredible injustice and human suffering. In such circumstances you need to take every opportunity you have, and we would certainly regard UN Security Council Resolution 2401 as an opportunity. UNSCR 2165, which was very much pushed by the UK at the UN Security Council, also represented an opportunity to allow humanitarian access into Syria to provide relief, without the permission of the Syrian Government.
As I have mentioned, there has already been contact between the Foreign Secretary and the Turkish authorities. We have urged them to embark on de-escalation. We believe it is right that they do, and we can do nothing other than to keep pressing and urging them. We very much recognise what the noble Lord, Lord Collins, said about this diverting attention from the fight against Daesh. For all of those reasons, we must persevere through an incredibly difficult and complex situation, with the lives of the civilians in those benighted areas and our responsibility to them uppermost in our minds.

Lord Robathan: My Lords, the horror and the tragedy of the situation throughout Syria and in Afrin are beyond speaking about. I should say that I am proud of the British Government’s humanitarian efforts and that we are the second aid donor there, and I hope our aid is successful.
I would like to ask two questions of the Minister. The first is: what, if any, legal basis or excuse do the Turks claim for their invasion of this part of Syria? It seems to be an astonishing, illegal act. Secondly, and perhaps more importantly—and I am not pretending there is an easy answer to this—there is the situation regarding NATO. Throughout the Cold War, Turkey was a stalwart ally against the Soviet Union. We now have difficulties with Russia and yet, for the first time in the 70 years of the alliance’s history, on the one side we have Turkey attacking Afrin and on the other side, looking straight at them, we have American assisting troops. Is that not the case? If it is, we should all be hugely concerned about our future security. I am not pretending it is easy, but what action can NATO take in this situation? The Minister talked about the United Nations. What action can the EU take to support NATO?

Lord Bates: My noble friend is right to point to the complexity of the situation that we face there. He invites me to make the case for Turkey. I do not particularly want to do that but, by way of explanation, it would take a different view of the linkages between the PYD and the YPG to the PKK, the Kurdish terrorist organisation that is proscribed both in the UK and in Turkey. Turkey sees the links there. From that perspective, it also has to be said that Turkey is host to the largest number of refugees from Syria of any country—some 3 million—and all accounts are that the way in which it looks after those refugees is exemplary. We can explore those issues, but we certainly do not believe that there is a justification for this. That is why we have called for the de-escalation, and we will encourage all other NATO allies to do the same.

Lord Soley: My Lords, the Minister will have a lot of sympathy because we all recognise the complexity of this and the frustration that we have at the failure of international policy, not least because of the policies of Russia over recent years—a point I have made before. But there is a different issue, which my noble friend Lord Collins raised, about the policy regarding the Kurdish situation and Turkey. It has always been a concern that Turkey, as a close NATO ally, as has been pointed out, has an ongoing problem with the Kurds. It is certainly not helping itself by what it is doing now; it will make it far worse to solve. I ask the Minister again, as my noble friend Lord Collins did: are the Government trying to get a policy on the relationship between Turkey and the Kurds? It is not for us to intervene, but it is for us to say that the problem with the Kurdish minority in Turkey will be made infinitely worse by what is happening now in Syria.

Lord Bates: As I said, we do not draw the parallel that the Turkish Government does between the PYD and the YPG. We believe that they have been courageous fighters against Daesh and have been very effective in that role. We do not recognise the links. Those points have been made. We have made the point that the battle against Daesh, which is crucial for stability in the region, is far from won and that this is a diversion of essential resource from that effort. This might not directly answer the point the noble Lord raised, but in the current context it is probably as far as I am able to go.

Lord Hylton: My Lords, this Statement is almost two months too late. The Turkish attack began on 20 January, supported by Leopard tanks and by militias containing many members of al-Nusra and ISIS. The attack was completely unprovoked. It has killed and wounded hundreds of people and displaced thousands of civilians. Turkey could have protected its border and its security by negotiations; it did not even attempt such a thing. Will Her Majesty’s Government condemn this brutal and vicious attack, which may well prolong the Syrian civil war? Will they re-examine Turkey’s right to remain a member of NATO and the Council of Europe?
Our Government rightly say that the Syrians must decide their own future. How can they possibly do so when Russia, Iran, Turkey and the USA have their own forces inside Syrian territory, and Israel makes constant air attacks whenever it feels a need to do so? It is surely not enough to boast about our aid for Syria since the war began. Will our Government become more realistic and press for the removal from Syria of all foreign forces, including volunteer fighters, money and weapons?

Lord Bates: I appreciate the noble Lord’s frustration. I know that he has visited the region and seen for himself in Aleppo the horrendous situation on the ground when these sieges take place. But, on the limited options we have as to what we can do, I do not think it is fair to discount the aid effort—the £2.46 billion that has gone there to provide relief. It is important.
We can work in three ways. One is humanitarian, providing emergency relief, and that is what I talked about in the Statement. The second is diplomatically, and I have outlined some of the ways in which we have been trying and continue to try to do that, with Turkey directly, through the UN Security Council and encouraging resumption of the talks. I have to say that there is also a military dimension to this: we have been part of the global coalition which has sought to attack the scourge of Daesh in that area, which is a massive cause of the instability that we see. So it is not just one, it is all. What I am trying to communicate to the noble Lord is that we are, to the best of our ability, trying to exert the maximum leverage we can in each of those areas, with great difficulty.

Lord Roberts of Llandudno: My Lords, when David Cameron was Prime Minister he made a pledge that by the year 2020 we would accept 20,000 Syrian refugees. The figure I have heard is that by 22 February this year we had welcomed 10,538. So we are halfway there but we are also three-quarters of the way since the pledge was made. I ask the Minister whether we can really open that door: we still have nearly 10,000 promises yet to be fulfilled. I suggest also that when that promise—that pledge—was made, nobody envisaged that four years on there would still be this slaughter, this total catastrophe, in Syria. Can we get away from thinking that the 10,000 promise was a target or a ceiling, and work according to need instead, such as in Idlib and all these other places? This past fortnight I believe that about 900 people have been killed, including at least 100 children. Can we somehow spur the Government on to get that pledge fulfilled and if necessary—and it is necessary at the moment—go beyond it?

Lord Bates: I thank the noble Lord, first, for recognising that David Cameron’s pledge, and Her Majesty’s Government’s pledge, of resettling 20,000 refugees is on track to be delivered. Of course, there are other dimensions to this. What we faced when we were having those debates was the equally horrendous situation in the eastern Mediterranean, where people were often being smuggled and exploited by people smugglers into making perilous journeys across into Greece. Through the EU facility for refugees in Turkey, which was a €3 billion facility to  which we contributed €328 million, we were trying to help in that area. Of course, again, we are providing help in the areas around Syria—in Jordan and Lebanon as well. So I hope the noble Lord will at least accept that we are working, again, on three different levels: in the region, through the Turkish facility; in the refugee camps with the UNHCR; and fulfilling our obligation to bring refugees here. We will continue to keep that under review.
House adjourned at 7.03 pm.